Operations Flashcards
what is the role of operations in a business?
to produce good and services to a suitable standard as efficiently as possible
what are the methods of production?
-JOB
-FLOW
-BATCH
describe job production:
-creates single unique product,
-it is specific to customers requirements,
-highly skilled workers are needed,
-can charge high prices,
describe batch production:
-it is the creation of a group of similar products made at the same time,
-all products within the same batch are identical, but batches can be different,
describe flow production:
-it creates identical standardised items which are produced on an assembly line,
-items move continuously from one operation to the next being added to at each stage resulting in identical finished products,
-it is highly mechanised,
-it is repetitive for staff,
what do operations do?
-they make products to help satisfy customers needs and wants,
-they work with suppliers to ensure raw materials are available at the correct time,
-they manage stock levels to make sure nothing runs out or that the business doesn’t have enough stock
what are the purchasing mix?
-price/cost of raw material
-discounts
-quality
-location
-lead time
-reliability and reputation
-credit time
what might a business have to consider about price when ordering from a supplier?
-
how much the supplier charges as the more the business pays, the higher the production costs, therefore they will aim to find a cheap supplier as keeping production costs down will result in higher profit,
what might a business have to consider about discounts when ordering from a supplier?
-whether a supplier offers any discount e.g. when bulk buying, as this would reduce costs.
what might a business have to consider about the quality of raw materials when ordering from a supplier?
-a business will need to purchase high quality raw materials to make their product if they want the finished product to be of a high quality.
-having a high quality finished product also means that a business can charge a higher price for it.
what might a business have to consider about the location of the supplier?
-the further away the supplier is from a business, the higher the costs might be for the suppliers to deliver the supplies to the business,
-transporting goods over a greater distance also has a higher carbon footprint, which is damaging the environment
what might a business have to consider about lead time when ordering from a supplier?
a business will have to ensure it chooses a supplier that can deliver within a time frame which means it doesn’t run out of materials
what might a business have to consider about reliability and reputations of suppliers?
-whether the supplier has a good reputation for being reliable and dependable when it comes to delivering the products on time,
-an unreliable supplier that does not deliver on time can result in production slowing down or stopping altogether
what are credit terms?
terms that indicate when payment is due for sales that are made on credit and any applicable interest or late payment fees
what is stock control?
stock control deals with keeping the correct amount of goods (stocks) in a business
what can having too much stock lead to?
a large amount of space being taken up storing stock and money is tied up in stocks
what can having too little stock lead to?
can result in a business being unable to cope with an unexpected demand and may have to turn customers away
what is understocking?
it is when a business holds too little stock/inventory to operate efficiently
what are some of the consequences of understocking?
-production slowing down or having to stop altogether due to a lack of material,
-orders not being fulfilled on time, leading to dissatisfied customers,
-not being able to accept unexpected orders resulting in a loss of sales,
-having to make frequent orders for small quantities of inventory resulting in higher administration costs,
what are some of the consequences of overstocking?
-money being tied up in inventory which could have been spent more effectively elsewhere in the business,
-inventory deteriorating or becoming obsolete before it is used, leading to high amounts of waste,
-increased storage and insurance costs meaning a reduction in profit,
-it makes it easier for staff to steal products
what are inventory control diagrams used for?
to help manage inventory levels to help it avoid overstocking or understocking
what is maximum inventory level?
the highest amount of inventory that a business should hold at one time to prevent overstocking
what is minimum inventory level?
the lowest amount of inventory that a business should hold at one time to prevent understocking
what is the re-order level?
the point in inventory levels when a business should place an order with its supplier to purchase more inventory, a business should consider its suppliers lead time when setting this level
what is the re-order quantity?
the amount of inventory that a business will order to bring levels back to maximum
what is lead time?
the time between the business placing an order with the supplier and the supplier delivering the product
what is one example of job production?
a dress maker creating a bespoke wedding dress
what is one example of batch production?
a bakery making a range of cakes and breads
what is one example of flow production?
car and electronics manufacturing
what are some advantages of job production?
-higher prices can be charged due to the unique nature of products,
-workers are involved in all stages of making the product meaning increased staff moral and motivation,
-products are fully bespoke to customers requirements meaning very satisfied customers.
what are the disadvantages of job production?
-highly skilled workers will need to be paid higher wages, meaning high production costs.
-lead time tends to be slow compared to other methods of production,
-a business will not be able to buy raw materials in bulk, meaning it misses out on discounts.
what are the advantages of batch production?
-allows for a degree of customisation for the customer, which leads to customer satisfaction,
-large amounts can be made, which means economies of scale can be achieved,
-usually requires less skilled workers than job production which reduces wage costs,
what are the disadvantages of batch production?
-equipment needs to be cleaned and/or changed between batches,
-requires careful production planning,
-a mistake in a batch could mean that an entire group of products is ruined, which could lead to increased wastage
what are the advantages of flow production?
-mass production of identical products could allow businesses to achieve high economies of scale.
-use of machinery leads to higher levels of output and consistency in quality,
-very large quantities of products can be made.
what are the disadvantages of flow production?
-products cannot be tailored to customers requirements,
-there is a high initial outlay in purchasing the computers and materials required to set up an assembly line,
-when equipment breaks the whole production line might need to stop.
