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Business > Operations > Flashcards

Operations Flashcards

1
Q

Examples of operational objectives

A
  • cost and volume targets
  • quality target
  • efficiency and flexibility targets
  • environment targets
  • adding value
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2
Q

Internal influences on operational objectives

A
  • finance
  • corporate objectives
  • Human Resources
  • marketing issues
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3
Q

External influences on operational objectives

A
  • economic environment
  • competitor efficiency flexibility
  • technological change
  • legal and environmental change
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4
Q

Definition : innovation

A

Changing something that is already there

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5
Q

What are the two types of innovation

A
  • product
  • process
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6
Q

Definition : product innovation

A

Launching new or improved products (or services) onto the market

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7
Q

Benefits of product innovation

A

+ higher prices and profitability
+ added value
+ opportunity to build customer loyalty
+ increased market share
+ public relations
+ enhanced reputation

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8
Q

Definition : process innovation

A

Finding better or more efficient ways of producing existing products or delivering existing services

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9
Q

Benefits of process innovation

A

+ reduced costs
+ improved quality
+ more responsive to customer service
+ greater flexibility
+ higher profits

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10
Q

Definition : invention

A

Formulation of new ideas for products or processes

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11
Q

Definition : labour productivity

A

the measure of how much output is produced per employee

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12
Q

Why does labour productivity matter

A
  • labour costs are usually a significant part of total costs especially in the service industry
  • business efficiency and profitability are closely linked to productive use of labour
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13
Q

Influences on labour productivity

A
  • extent and quality of fixed assets (equipment, IT systems)
  • skills, ability and motivation of the workforce
  • methods of production organisation
  • extent to which the workforce is trained and supported (e.g. working environment)
  • external factors (e.g. reliability of suppliers)
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14
Q

Calculate : labour productivity

A

output per period (units) / number of employees at work

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15
Q

Methods of improving labour productivity

A
  • measure performance and set targets
  • streamline production processes
  • invest in capital equipment (automation and computerisation)
  • invest in employee training
  • improve working conditions
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16
Q

Definition : unit cost

A

Costs to manufacture a single product

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17
Q

Definition : capacity

A

measure of how much output it can achieve in a given period

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18
Q

Definition : capacity utilisation

A

how much a business uses of that capacity

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19
Q

Calculate : capacity utilisation

A

Actual output / what the business could produce x100

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20
Q

Calculate : average cost per unit

A

total production cost in a total time period / total output in a period

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21
Q

Importance of capital utilisation

A
  • measures if there are any unused resources
  • using more capacity means production costs tend to fall making a business more competitive
  • the business might have an aim to use as much capacity as possible to keep the unit costs low
  • a high level of capacity utilisation is required if a business has a high break even output due to significant fixed costs of production
22
Q

Why might a business operate below 100%

A
  • lower than expected market demand
  • a loss of market share
  • seasonal variations in demand
  • recent increase in capacity
  • maintenance and repair programmes
23
Q

How can a business operate above capacity

A
  • increase workforce hours
  • sub contract some of production activities
  • reduce time spent maintaining production equipment
24
Q

What happens to operations at low utilisation

A
  • higher unit costs can impact competitiveness
  • less likely to reach breakeven output
  • capital tied up in underutilised assets
25
Q

What happens to operations at high utilisation

A
  • negative effect on quality : production is rushed, less time for quality control
  • employees suffer : added workloads and stress, de motivating if sustained for too long
  • loss of sales : less able to meet sudden or unexpected increases in demand, production equipment may require repair
26
Q

Definition : economies of scale

A

a proportionate saving in costs gained by an increased level of production

27
Q

Definition : lean production

A

production method of reducing waste

28
Q

Advantages of lean production

A

+ reduce waste
+ cut costs
+ they can be more responsive to customer needs
+ improved quality

29
Q

Disadvantages of lean production

A
  • increased time
  • lack of strategic focus
30
Q

Definition : just in time production

A

focuses on producing exactly the amount you need at exactly the time your customers need it

31
Q

Definition : just in case production

A

stock control method that involved producing or purchasing stock with excess stock in place

32
Q

What would a business need to have to ensure effective lean production takes place

A
  • Good relations with suppliers
  • Committed, skilled and motivated employees
  • A culture of quality assurance
  • Trust between management and employees
33
Q

Definition : cell production

A

putting people into teams and giving them responsibility for part of the production process

34
Q

Advantages of cell production

A
  • enhances production environment and quality control
  • improved capacity utilisation
  • reduction in manufacturing time and waste
  • develop a highly skilled and efficient workforce
  • smaller workforce (less costs)
35
Q

Disadvantages of cell production

A
  • train staff to use the machinery (increase costs)
  • machinery could breakdown
  • making the set up, moving the machinery and - training can take time
36
Q

What does having stock enable

A
  • goods available for production
  • delivery to customers
  • enables customer demands to be met
  • allows discounts to be given for bulk buying
37
Q

Types of stock

A
  • raw materials
  • work in progress
  • finished goods
38
Q

Factors influencing stock levels

A
  • level or unpredictability of demand
  • degree of spoilage
  • rental costs for storage
  • bulk buying discounts
  • reliability of suppliers
  • competition
  • just in time production or production methods
39
Q

Benefits of holding stock

A
  • satisfying demands
  • coping with fluctuations in demand
  • buffer stock to meet deliveries
  • cost savings due to economies of scale
40
Q

Drawbacks of holding stock

A
  • storage costs
  • opportunity cost
  • admin / insurance costs
  • out of stock costs
41
Q

Definition : buffer stock

A

Difference between minimum stock and no stock

42
Q

Elements of stock control

A
  • maximum stock level
  • minimum stock level
  • re order level / order quantity
  • buffer stock
43
Q

Calculate : average stock level

A

(Minimum level + maximum level) / 2

44
Q

What is a stock controls responsibility to avoid

A
  • theft
  • waste
  • storage
45
Q

What should a stock control ensure that stock is

A
  • monitored
  • controlled
  • recorded
46
Q

How is stock control ensured

A
  • stock can only be issued after receiving stock requisition
  • stock levels are recorded manually on stock report cards or electronically
47
Q

Storage of stock

A
  • can be held in one central area
  • or located in different areas in which they are used
48
Q

Advantages of centralised stock storage

A
  • improved security from theft as it is carefully supervised
  • staff maintain stock by following agreed procedures
  • Central stock of components or materials may cost less to hold than many small ‘on-site’ supplies
  • Improved efficiency in stock handling and management
49
Q

Advantages of decentralised stock storage

A
  • Stock is always ‘at hand’ when required
  • Orders of new stock reflect actual production usage or sales levels
  • Speedier turnover of a small quantity of stock reduces the likelihood of its deterioration or decay
50
Q

What is FIFO

A
  • first lot of stock that goes into warehouse should be the first that goes out
51
Q

What is LIFO

A
  • most recent stock that comes into warehouse should be the first that goes out

Business (6 decks)

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