Operations Flashcards
What are the 6 operational objectives?
Lower Unit Cost
Improve quality
Response speed/flexibility
Create added value
Environmental
Dependability
Reduce unit cost obj.
higher profit margin
increase scale= eos
Improve quality obj.
increase customer satisfaction
increase rep
lower price sensitivity
Response speed/flexibility obj.
adapting to change
fulfilling orders quick
delivery met
Create added value obj.
increase profit margin
Environmental obj.
consider community
pollution produced
Dependability
customer needs/wants met?
average unit cost formula?
total costs/ units produced
labour productivity formula?
total output/ no. of employees
How to increase labour productivity?
training
reward system
tech
management
costs of capacity
equipment
facilities
labour
Capacity Utilisation formula?
actual output/ maximum output x100
actions if capacity utilisation is low?
reduce capacity size
increase sales
actions if capacity utilisation is high?
outsource
reduce demand short term
Adding Value- definition
the EXTRA value a business creates through production, distribution or marketing process
Efficiency- definition
production maximised based on given level of factors of production (CELL)
Importance of increasing efficiency?
reduce unit costs- increase price (demand)/profit margin
use efficacy gains- increase quality/wages(motivation)
How to improve efficiency?
-use capacity better
-increase labour productivity
-lean production