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Higher Business > Operations > Flashcards

Operations Flashcards

1
Q

maximum inventory level depends on…x4

A

storage space available
finance available
number of sales
lead time deliveries

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2
Q

minimum stock level depends on…x4

A

lead time, reorder quantity, sales, production budget

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3
Q

reorder level is a…

A

fixed point between min and max level that a new order is placed. when stock reaches this level, it triggers a new order

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4
Q

buffer stock is the…

A

extra inventory below the agreed minimum to be used in emergencies

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5
Q

lead time is the…

A

difference between the time of reorder and when the stock is delivered

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6
Q

just in time JIT is when…

A

a business gets a stock delivery just as they need it for production or goods that aren’t produced until the order is placed

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7
Q

advantages to JIT are…x4

A

perishable goods are kept fresher which increase quality
cost effective use of materials as it eliminates wastage and time lost at every stage, less going to landfill
improves cash flow as capital isn’t tied up in inventory
less warehousing or storage required which decreases storage costs

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8
Q

disadvantages to JIT are…x4

A

companies lose out on EOS meaning company has to spend more per unit meaning less profit is made
a lot of faith in suppliers to be flexible and reliable, could have delays
frequent delivery of stock will increase carbon footprint
extra delivery costs

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9
Q

centralised storage is…

A

storing inventory in 1 centralised location- in a large, purpose built building

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10
Q

centralised storage advantages are…x4

A

specialist staff makes handling quicker and more efficient
also means less chance of error and less chance of wastage
located next to infrastructure meaning it is easily accessible when transporting goods which means its easier and quicker to deliver goods gaining business good rep
store large volumes means it can facilitate bulk buying which reduces costs and increases profit

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11
Q

centralised storage disadvantages are…x3

A

costs of specialist staff and equipment due to expensive maintenance and repairs which increases production costs and reduces profit
deliveries need to be made to each division and if communication isn’t clear, the amount of stock could be wrong which causes delays
training costs increased to become specialist staff

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12
Q

decentralised storage is…

A

storing inventory in many locations e.g. smaller warehouses of storage rooms

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13
Q

decentralised storage advantages are…x2

A

stock is always available to hand and available for production which means production doesn’t have to stop
storing lower levels of stock means the business won’t experience overstocking, increased wastage or theft

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14
Q

Purpose of warehousing…

A

As it is almost impossible to match output with demands, it becomes necessary to store inventory of finished goods

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15
Q

Advantages of warehousing are…x3

A

Stock can be held securely which means large levels of stock can be stored and protected from theft
Inventory can be held in appropriate conditions to lengthen its lifespan which reduces wastage as less is going out of date
Allows inventory to held ready for surges in demand or unexpected delays with suppliers

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16
Q

Disadvantages of warehousing are…x3

A

Can be expensive to run e.g. rent, electricity, staff
Large amounts of capital tied up in inventory
Flood/fire can ruin large amounts of inventory which increases wastage and reduces profit

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17
Q

Logistics is…

A

Coordinating and moving resources from one location to another desired location e.g. other storage or customer

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18
Q

Advantage of own logistics/vans is…

A

Complete control of vehicles and drivers

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19
Q

Disadvantages of own logistics/vans are…x2

A

High capital and running costs
Careful route planning needed

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20
Q

Advantage of hired logistics/vans is…

A

Reduces capital outlay and more flexibility for increasing or decreasing stock

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21
Q

Disadvantage of hired logistics/vans is…

A

Less control and reliability

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22
Q

Labour intensive production production is where…

A

A business uses a larger proportion of human input than machinery in the production process

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23
Q

Capital intensive production is when…

A

A business relies on machinery heavily in the production process to produce a standardised product

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24
Q

Advantages of capital intensive production are…x5

A

Machines can operate 24/7 which means higher volumes can be produced
The product is standardised which means quality is consistent
Reduces chance of human error which decreases wastage
Wage costs are reduced as less staff are required
Machines can do jobs considered dangerous to humans which reduces accidents

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25
Q

Disadvantages of capital intensive production are…x4

A

Set up costs and initial outlay of equipment and machinery can be expensive
Leads to redundancies if machines take over jobs which reduces profit due to high redundancy costs
Breakdowns will cause production to stop…
Technology will need to be maintained

26
Q

Advantages of labour intensive production are…x4

A

Personalisation and customer specifications can be made
Lower start up costs due to low/no initial outlay on machinery
More responsive to change as change is able to happen in production
Workers more motivated as invoked in whole process

27
Q

Disadvantages to labour intensive production are…x5

A

A skilled workforce can be expensive to recruit, pay and train
No EOS so production costs are likely to be high
Can’t work 24/7 as staff need breaks. Could also be absent or ill
Additional quality measures needed due to human error
More time consuming production process

28
Q

Differences between capital and labour intensive production are…x4

A

Labour has highly skilled workers which means high wage costs whereas capital have lower skilled workers
Capital is mainly operated with machinery whereas labour is predominantly human input in production
Labour produces bespoke products whereas capital produce standardised products
Capital produces mass volumes so benefit from EOS whereas in labour, EOS isn’t available

29
Q

Factors that should be considered when deciding a method of production are…x5

A

Tech available e.g. in developing countries, tech needed may not be accessible or available which would sway towards labour
Market size and quantity e.g. if product is required for mass markets, capital is better suited
Finance available e.g. capital intensive has expensive set up costs due to equipment, robots required so labour may be best choice
Skill of workforce e.g. if business has highly skilled workers, it is better suited for labour intensive
Nature of product e.g. if it needs customisation, labour intensive is more likely to be used

30
Q

Quality input ensures…x3

A

Highly trained employees- less mistakes, less wastage
Up to date and maintained machinery- additional costs in maintenance
High quality raw materials-higher costs, reduces profit

31
Q

Quality control is…

A

Quality is checked at the end of the manufacturing process

32
Q

Quality control advantages are…x3

A

Prevents defects from reaching customers reducing complaints
Could sell as seconds
Reactive

33
Q

Quality control disadvantages are…x2

A

High levels of wastage as errors spotted at end of production
Reworked products will reduce profit

34
Q

Quality assurance is when…

A

Quality is checked at every stage of the production process

35
Q

Quality assurance advantages are…x4

A

Less wastage as quality checked at every stage
Fewer errors due to skill
Worker motivation increased due to ownership of recognition of their work
Preventative

36
Q

Quality assurance disadvantages are…x3

A

High staff costs e.g. training for quality
Changes organisational cultures which could cause resistance in staff
Additional staffing costs to check production

37
Q

Quality management is…

A

A combination of quality assurance and the process of continuously improving the business by dining areas that could be running more smoothly and taking action to improve it

38
Q

Features of quality management are…x4

A

Evidence based decision making- decisions made on analysis of data and info
Customer focus- understand their needs and meet or exceed their expectations
Relationship management- enhance the ability of all parties to create value
Continual improvement- in the companies overall performance is a permanent objective

39
Q

Advantages of quality management are…x4

A

Strengthens competitive position
Customer satisfaction encourages loyalty
Eliminates defections and waste which increases profitability
Improves employee morale as they are empowered

40
Q

Disadvantages of quality management are…x3

A

Expensive due to extra training costs
Changes org culture which could cause resistance
Takes years to implement and lack of proper planning causes systems to fail

41
Q

Benchmarking involves…

A

Identifying the current position of business in comparison to industry leader and set targets to meet or exceed leader.

42
Q

Advantages to benchmarking are…x3

A

New ideas and perspectives from external sources can give competitive edge
Motivate employees to try and match/exceed industry leader
Supports a culture of continuous improvement

43
Q

Disadvantages of benchmarking are…x3

A

Market leader may resist making info available to competitors
May not be possible to match quality due to internal constraints e.g. lack of finance, tech, employees available
Needs plan of change which requires time and resources

44
Q

Quality circles are when…

A

A group of employees and managers that meet regularly to identify and resolve problems about quality in the production process

45
Q

Advantages of quality circles are…x4

A

Employees more motivated due to input which increases productivity
Improves quality and reduces wastage
Increases job satisfaction reducing staff turnover
Enhances relations between managers and employees as employees feel more valued

46
Q

Disadvantages of quality circles are…x3

A

Managers could ignore quality circle input which reduces morale and increases staff turnover
Take employees away from production which are costly and lead to lost output
Need proper management or could result in informal discussions

47
Q

Mystery shoppers aim to…

A

Assess the quality of customer service by sending in trained employees to pose as shoppers to anonymously evaluate customer experience

48
Q

Advantages of mystery shoppers are…x3

A

Improves employee awareness of the importance of customer service
Feedback received can improve processes
Training needs can be identified

49
Q

Disadvantages of mystery shoppers are…x3

A

Expensive for of market research
May include bias towards org or person in their feedback
Employees may resent the secretive nature of this method and become demotivated

50
Q

The British Standards Institute BSI…

A

Sets the benchmark for quality in the UK

51
Q

The International Standards Organisation ISO…

A

Standards are recognised worldwide

52
Q

A kite mark is put…

A

On safety equipment by the BSI including smoke alarms, extinguishers
To help customers with making informed decisions with peace of mind that their purchases are entirely fit for purpose

53
Q

CE Marking is…

A

A certificate that indicates the product complies with required health, safety and environmental protection standards for the products sold within the European economic area (EEA)

54
Q

Some industries award their own logo and quality assurance for reaching certain level of quality e.g.

A

British lion mark for egg quality
Wool mark logo and the Scottish beef quality award

55
Q

Benefits of using quality standards/symbols are…x6

A

Improved health and safety in the workplace
Improved operation processes e.g. quality checks which reduces wastage
Can be used in the marketing to enhance the reputation which makes customers confident in buying the product as the business is seen to be dependable and reliable
Improve the morale of the workforce due to better conditions and satisfaction
Competitive advantage
Customer loyalty may be able to charge higher prices

56
Q

Drawbacks of using quality standards/symbols are…

A

Time consuming to secure and must be maintained which means processes need to be put in place to ensure they are maintained
If the organisation fails to get revalidated it can damage the reputation as customers will assume quality has decreased
May be a legal requirement to gain a quality standard e.g. to sell electrical goods kite marks are required which can be costly

57
Q

Fairtrade is when…

A

Suppliers of real materials receive a guaranteed and fair price for their goods

58
Q

Advantages of Fairtrade are…x5

A

Staff more motivated if working for a responsible business which reduces staff turnover
Can attract high quality applicants which improves the quality of goods and quantity produced
Ethical investors more interested which can be a valuable source of finance
Can be used in marketing campaigns which can attract sales
Positive impact on producers of raw materials and good supply chain relationships

59
Q

Disadvantages of Fairtrade are…x4

A

Higher prices for customers as more as paid to suppliers to give their price
Product may be transported along way leading to environmental issues
Businesses may have a more limited choice of suppliers
Losing fair trade mark after gaining one will result in negative publicity

60
Q

Reducing wastage by…x5

A

Training employees
Maintaining equipment which reduces wastage by ensuring longevity
Controlling stock levels which stops perishing goods
Disposing of waste ethically to prevent damage to the environment
Reducing amount of wastage going to landfill
Reducing packaging by using recyclable materials make it easier for customers to dispose

61
Q

Benefits of being environmentally friendly are…x4

A

Positive impact on the environment which gives the business a good reputation and improve sales
Attract ethical investors
Renewable energy reduces energy costs and bills as they don’t need to pay for gas oil and fuel
Awards can be granted which can be used in PR

62
Q

Drawbacks of being environmentally friendly are…x3

A

Investments will be expensive in the short term e.g. installing win turbines or solar panels
New procedures may have to be adapted which can be time-consuming
Most environmentally friendly procedures for light on natural environment like the wind and sun which is not always successful due to changing weather

Higher Business (16 decks)

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