Operations Flashcards
Inventory Management System
Maximum - Most amount of inventory held
Avoids overstocking
Minimum - Least amount of inventory that should be held
Avoids understocking
Re-order Level - Level which inventory is re-ordered
Avoids running out of inventory
Re-order Quantity - Amount ordered
Ensures quantity ordered isn’t too much or too little
Lead Time - Time taken between order placed & inventory arriving
Allows business to react to rush orders
Buffer Inventory - Extra inventory to be used in emergencies
Ensures production doesn’t stop & sales are continued to be made
Centralised Storage
Storing inventory in one central location in a large, purpose-built warehouse
Centralised Storage - Advantages
Staff employed to maintain inventory
- Improves speed of inventory handling
Can store massive amounts of inventory
- Benefits from economies of scale
Same procedures for issuing inventory used across organisation
- Improves consistency
Located close to infrastructure
- Easier for suppliers to deliver inventory
Centralised Storage - Disadvantages
Inventory delivered to each department
- Causes delays
Specialist staff employed to maintain inventory
- Increases wage costs
Specialist equipment needed
- Expensive to purchase & maintain
JIT
Ordering supplies only when required for production
JIT - Advantages
No money tied up in inventory
- Improves cash flow
No warehouse required
- Saves costs
Lean production
- No waste
JIT - Disadvantages
Late deliveries mean understocking
- Delays in production
Requires good relationship with suppliers
- Takes time to develop & maintain
No room for error in production
IT
Used to purchase supplies quickly
EPOS
Can automatically re-order depleted inventory
Computerised Systems
Can check & find inventory
Automated Systems
Can track deliveries
Spreadsheets
Accurately & quickly produce production budgets
CAM
Used in automated production
CAD
Used to design item before manufactured
CAD - Advantages
Reduces space needed
- Hard copies of drawings not needed to be stored
Accuracy
- Less human error in drawing measurements
Layouts can be saved to use again
- Saves time
CAD - Disadvantages
Less people required to create CAD drawings
- Impact on unemployment
High expenses
Staff need trained in how to use software
- Takes time & money
Automation
Production is fully automatic
Automation - Advantages
Robots can do jobs dangerous for humans
Robots can work 24/7
Human control not needed, less employees, reducing wage costs
Concentration not lost, fewer mistakes made which limits waste
Consistent
Automation - Disadvantages
Expensive to invest in
Breakdowns can lead to hours of production being lost
Will demotivate employees due to replacement
Lack of creativity
Ethical Issues
Philanthropy
Animal welfare
Fair trade
Ethical Issues - Advantages
Awards granted for being ethical
Can attract customers that agree with their principals
Ethical Issues - Disadvantages
Audits needed
- Time consuming
Complex decision-making
Fair Trade
Suppliers of raw materials receive a guaranteed & fair price for their goods
Fair Trade - Advantages
Awarded Fairtrade mark
- Appealing to customers
Demonstrates ethical commitment to customers
Fair Trade - Disadvantages
Losing Fairtrade mark can result in bad publicity
More expensive
Limited choice of suppliers
Environmental Issues
Carbon footprint
Sustainable raw materials
Waste
Environmental Issues - Advantages
Gains a positive reputation
Awards granted for being environmentally friendly
Environmental Issues - Disadvantages
Investment in measures is expensive
Environmentally friendly procedures rely on natural environment
Quality Standards
Proves a product has met agreed industry standard
Quality Standards - Advantages
Awards prove to customers that product has met agreed standard of quality
Symbols used as promo tool to gain competitive edge
Customers have confidence in purchasing product
Higher prices charged as quality is high
Quality Standards - Disadvantages
Time-consuming processes endured to receive awards
Agreed standards need maintained at all times
If award is removed, business would gain a bad rep
Annual checks by awarding bodies can disrupt production
Automation
Fully automatic production
A - Can do jobs dangerous for humans
- Don’t take breaks, can work 24/7
- Reduced wages as less staff needed
- Consistent
D - Expensive to set up & maintain
- Breakdowns lead to hours of production lost
- Demotivates employees
- Lack of creativity
Mechanisation
A - Improves accuracy
- Speeds up production
D - Humans require breaks
- If machinery breaks, business has to repair it
Labour-Intensive Production
A - Less expensive than capital intensive
- Creative
D - Risk of human error
- Humans require breaks
- Have to be paid overtime
Quality Control
Inspecting raw materials or finished goods to see if they’re acceptable
A - Ensures faulty goods not sent to customers
- Limits potential for bad rep
D - Creates waste if goods not checked till made
- Products have to be reworked, expensive
Quality Assurance
Products checked at different stages
A - Less waste
- Easy to identify where problems lie
D - Slows down production
- Increases cost of production
Continual Improvement
Always attempting to improve quality
A - Stays ahead of competition
- Business can react to external factors
D - High staff-development costs
- Employees feel under pressure to keep improving
Quality Circles
Employees meeting with managers to discuss problems
A - Employees motivated as they have a say in decision-making
- Management get well-informed suggestions from workers
D - Meet during company time, production time lost
Benchmarking
Copying quality of finished product
A - Product will be best on market
- Saves time developing own approach to ensuring quality
D - Difficult to gain info on other businesses’ methods
- Only ever as good as benchmark
Used to purchase supplies quickly
Internet
Used to research supplier prices
