operations

Question 1

What are the factors to consider when choosing a Supplier?

Answer 1

• price
• quality
• location
• delivery time
• reliability
• reputation

Question 2

What are the Costs and Risks of Overstocking?

Answer 2

• the business will have additional storage costs
• money is tied up in inventory which could be used elsewhere
• inventory may perish or go out of date
• changes in demand could mean inventory exceeds its shelf life and goes to waste (obsolescence)
• increased risk of theft
• money spent on inventory may mean there is no cash available to pay wages, for materials, rent, etc.

Question 3

What are the Costs and Risks of Understocking?

Answer 3

• you run out of inventory so the business has nothing to sell, or may have to stop production
• customers have to go elsewhere to buy
• poor reputation because you don’t have the product when the customer wants it
• customers may stop coming completely
• loss of sales and profit

Question 4

What does a business have to calculate to Manage Inventory Levels?

Answer 4

• Economic inventory level - the maximum it wants to hold
• Minimum inventory level - the point below which inventory should not fall
• Re-order inventory level - the point at which it should order more stock
• Re-order inventory quantity - the amount of inventory needed to bring the level back to the economic inventory level

Question 5

What are the Methods of Production?

Answer 5

Job Production- a single product made to a customers specific requirements

Batch Production- when a group of products are made at the same time

Flow Production- continuous process — as work on a task at a particular stage is complete, it will be passed directly to the next stage for processing.

Question 6

What are the Costs and Benefits of each Method of Production?

Answer 6

Job Production

Benefits
- changes can be made during the production
- allows for products to be made exactly how the consumer wants them to

Costs
- uses highly skilled workers who are paid more
- can involve specialist machines or equipment which can lie idle when not needed

Batch Production

Benefits
- usually cheaper than job production — each product costs less to make
- many products can be made at the same time

Costs
- more difficult to meet customers’ requirements
- machinery needs to be cleaned/reset for the next batch

Flow Production

Benefits
- can be used when there is a constant demand for the product
- can be used when the product and/or production tasks can be standardised
- cheapest form of production for cost per unit

Costs
- it is very expensive to set up
- customers’ exact requirements cannot be met

Question 7

What are the methods of ensuring Quality?

Answer 7

• quality control — checking the product once it has been completed
• quality management — checking the product at several stages of the production process
• quality inputs — using good raw materials, machinery and staff to create the product
• quality circles — groups of people who meet regularly in the organisation to identify discuss, and resolve problems (usually includes a range of people from the workforce)
• benchmarking — uses the best performers in a particular industry to set standards which the business must meet

Question 8

What are the Costs and Benefits of Ethical Production?

Answer 8

Benefits
- high farm standards ensure the safety of the consumer and the welfare of the animals
- customers like assurance that the environment and/or the animals have not suffered in any way
- improves the organisations reputation
- may attract more people to work for the organisation

Costs
- it is more expensive to produce this way
- paying the living wage costs more than the legal limit

Question 9

What are the Costs and Benefits of environmentally friendly production?

Answer 9

Benefits
- reducing waste can improve the business’ reputation
- may lead to higher sales/profits
- recycling reduces the amount of waste going to landfill
- minimising packing means consumers are throwing away less
- reduces the cost of production and can reduce other business outlay
- reduces the weight of the product meaning lower transport costs

Costs
- the recycling process may be quite expensive
- not all products are recyclable
- some products require a lot of packaging to ensure safe transportation

Question 10

What are the ways of using ICT/Technology in Operations?

Answer 10

• computer-aided manufacturing (CAM)
• metal detectors
• online ordering
• barcodes
• email