operations

Question 1

Labour Intensive Production

Answer 1

Labour intensive production is when products are mainly produced by human workers. Machines and special tools may be used too, but overall it requires human creativity and effort to produce the product

Question 2

Advantages of labour intensive production

Answer 2

Customised products are easier to make.
Humans can use their own initiative and problem solve.
Products are unique.
Made to suit customers’ requirements.
Higher prices can be charged.
The product can be altered during production process.

Question 3

Disadvantages of labour intensive production

Answer 3

Quality of products can vary due to expertise of the worker.
Skilled workers take time to train.
Skilled workers will be paid more than unskilled workers.

Question 4

Capital Intensive Production

Answer 4

Capital intensive production is when products are mainly produced by machines and robots.

Question 5

Advantages of capital intensive production

Answer 5

24/7 operation possible/no need for breaks.
Products can be mass produced.
Reduces labour costs since fewer workers are required.
Reduced need for supervision by managers.
Benefits from economies of scale so lower unit costs.
Machinery provides consistent quality/standardised.

Question 6

Disadvantages of capital intensive production

Answer 6

Can involve large set-up costs to invest in plant, machinery and equipment.
Breakdowns in production can be catastrophic to cash flow and profits.
Money is required for improving/maintaining technology.

Question 7

JOB PRODUCTION

Answer 7

Job production involves producing custom work such as a one-off product for a specific customer. It usually involves a highly skilled individual, a group of workers, working on one task at a time.

Question 8

Advantages of Job Production

Answer 8

High quality products due to small-scale and focused production
Personalised products can result in more revenues and greater customer satisfaction
Higher job satisfaction due to employees’ strong commitment to the product
More flexibility compared to mass/flow production methods

Question 9

Disadvantages of Job Production

Answer 9

Manufacturers usually pay higher wage costs for skilled workers
Job production can take up a lot of time and resources
Specialised machines may be needed for complex items adding to the cost

Question 10

BATCH PRODUCTION

Answer 10

Batch production is a method of manufacturing where identical or similar items are produced together for different sized production runs.

Question 11

Advantages of Batch Production

Answer 11

Compared with mass/flow production, goods can be produced in smaller quantities, making the manufacturer’s overall process more agile and efficient.
Varying products means the manufacturer is reducing its risk rather than concentrating on a single item that might go out of demand.
Producing a variety of products gives customers a wider choice and therefore increases the possibility of sales.
Batch production allows products to be differentiated to suit the customer’s specific needs. This is well suited to niche markets where a higher price for the product can be charged and the business will also face less competition.
Batch is suited to dynamic markets (quickly changing), as the product can be changed or altered to better suit the changing consumer demands. This means the business is less likely to lose sales to competitors.
Machinery required for batch production is often cheaper than the complex, mass-scale equipment required to carry out flow production.

Question 12

Disadvantages of Batch Production

Answer 12

Batch has the potential for employee downtime. When there is a ‘pause’ for reset or other adjustments between stages of production, as well as quality control checks and testing, there may be employee downtime. This is particularly the case if equipment or machinery needs to be cleaned.
When goods are being produced in a series of steps, production can take longer. Production cannot move onto the next stage until every item in the batch is ready so there can be delays and down time in production. This is especially true if alterations to machinery need to be made before production can continue.
High wastage as if one item in the batch is wrong the entire batch gets thrown away

Question 13

FLOW PRODUCTION

Answer 13

mass production of standardised goods

Question 14

Advantages of Flow Production

Answer 14

Flow (or mass) production lowers the cost-per-unit as the business can access economies of scale. This results in lower unit costs and higher profit margins.
There is no lag time whilst the machines are being reloaded/reset for different products, as in batch production.
As items move along a continuous flow of automated machines the product can be delivered more quickly, which improves customer satisfaction.
Since the flow production is mostly automated businesses don’t need to hire high-skill labour to operate the system.
Producing mass products requires manufacturers to order a large number of raw materials at a time. As a result, they can benefit from bulk purchase discounts which reduces unit costs.

Question 15

Disadvantages of Flow Production

Answer 15

Set-up costs are high since they involve buying and installing specialised machines and creating new production programmes.
Machines in flow production are expensive to buy and set up and they perform only one function. Thus, it is difficult to replace them if something breaks down.
If one station breaks down, the whole assembly line will stop as well.

Question 16

Outsourcing

Answer 16

Outsourcing involves getting another business or organisation to provide a process or service rather than doing it themselves.

Question 17

Benefits of outsourcing:

Answer 17

Fewer employees required so may lead to cost savings.
Outsourcing does not tie up the organisation’s time and resources in activities that could be done externally.
Allows the organisation to focus on core activities - therefore the core service can be improved.
Outsourcing can improve the quality and of the service or product offered.
External suppliers may have specialist equipment and training that the business does not have or cannot afford.

Question 18

Drawbacks of outsourcing:

Answer 18

Loss of control over the organisation’s activities may result in quality issues.
Loss of control over the organisation’s activities may result in confidentiality issues.
Possibly locked into expensive contracts putting pressure on budgets and cash flow.

Question 19

QUALITY MANAGEMENT

Answer 19

When an organisation puts systems in place to ensure that all activities and tasks undertaken achieve a desired level of excellence

Question 20

QUALITY CONTROL

Answer 20

Quality control means that the finished products are checked by inspectors to see if they meet the set standard. Products are inspected at the start and the end of the production process. Any product not meeting the standards of quality set by the business will be sent for rework or discarded.

Question 21

Benefits of quality control

Answer 21

Reduces the chance of poor quality products reaching the consumer.
It makes employees more conscious of the importance of quality.
It can help to make production more efficient.
It can raise morale of workers knowing that they are producing higher quality products.
Products are more uniform.

Question 22

Drawbacks of quality control

Answer 22

Faults are usually only found at the end of the production process
Because products are only inspected at the end, individuals on the production line are not necessarily encouraged to take responsibility for the quality of their work
Higher wastage costs

Question 23

QUALITY ASSURANCE

Answer 23

Quality assurance means that quality checks are built into the production process.

Question 24

Benefits of quality assurance

Answer 24

Everyone on the production line takes responsibility for delivering quality
Reduces production defects and faults to a very low level or to zero
Mistakes are identified quickly and addressed, which reduces waste
Reduced waste saves the organisation money

Question 25

Drawbacks of quality assurance

Answer 25

Quality assurance can be costly due to the regular checks being made throughout the production process.
Checking regularly can also slow down production, resulting in lower productivity.
It is a medium to long-term strategy and cannot be implemented quickly.

Question 26

Quality Inputs

Answer 26

Quality Raw Materials - seeks to ensure that the quality of raw materials being used in the production process is of the standard required.
well-trained staff - ensures that all staff are trained so they are competent and are all working to the same quality standards.
well-maintained machinery - ensures that equipment and machinery is maintained so that they do not make mistakes affecting quality.

Question 27

Quality Circles

Answer 27

A small groups of employees meet regularly to discuss how to improve methods of working.
Systems can be improved based on suggestions from workers doing the job.
Employees can feel more empowered and involved.
Increases staff motivation and productivity and lowers staff turnover.
Improves employee relations.
Improves communication between employees and management.
Better quality products reduces complaints from customers

Question 28

Benchmarking

Answer 28

Identifies best practice in the market (the benchmark).
Benchmark standards are then adopted by the organisation.
Improves performance and quality if benchmark standards are achieved.
Improves quality and makes the organisation more competitive in the market.
Minimises the risk of a product failing when launched onto market.
Can lead to the identification of other functions in the organisation that could be improved.
Can be motivational for employees giving them goals to achieve.
However, can be time consuming to study and analyse competitors’ techniques.
Might be difficult to find a suitable company to benchmark against.

Question 29

Quality Standards and Symbols

Answer 29

‘Quality Standards’ - when the product reaches the required standard it can be awarded a quality logo.
‘CE Marking’ - shows that a product meets EU safety, health or environmental standards and that it complies with EU legislation.
‘BSI Kitemark’ - a quality trade mark which shows that products meet minimum standards of safety and quality.
A ‘Trade Logo’ (eg, Fairtrade, Recycling) is an identifiable sign which shows that a product or service conforms to certain standards or identifies them in a specific category.

Question 30

Mystery Shopper

Answer 30

Mystery shoppers are employed by the company to act as customers.
They sample the product or service and report back to the business on their experience.
Feedback is used by the company to help improve their service or product.
Mystery shoppers do not identify themselves to the company therefore they are gaining an accurate reflection on the service provided to customers.

Question 31

Overstocking

Answer 31

Having too much inventory is better than having no inventory, as this would prevent any production.
Overstocking has the benefit that it allows a business to meet any unexpected orders.
Money tied up in high inventory levels could be invested elsewhere in a business.
Inventory can go out of fashion or spoil meaning the business will have to write it off as a loss.
Having too much inventory results in high storage costs in terms of both overheads and security.

Question 32

Understocking

Answer 32

Production may stop due to the lack of available materials.
Sales fall or stop completely leading to cash flow problems for the business.
Customers who don’t receive their orders on time will be dissatisfied.
The business cannot fulfil orders on time so will be viewed as unreliable.
The reputation will be damaged and customers might go to competitors.

Question 33

Inventory Management

Answer 33

Inventory management is a way of controlling inventory levels to avoid the problems of overstocking and understocking.

Question 34

Maximum inventory level:

Answer 34

the largest amount to be stored

Question 35

Minimum inventory level

Answer 35

the lowest amount to be stored

Question 36

Re-order quantity

Answer 36

the amount of inventory ordered to restore levels to their maximum point

Question 37

Lead time

Answer 37

time taken between ordering and the inventory being delivered

Question 38

Re-order level

Answer 38

the level at which new inventory is ordered

Question 39

Buffer inventory

Answer 39

items held in case deliveries are held up or there is an unexpected large order

Question 40

Benefits of Computerised Inventory Control

Answer 40

Use databases to automatically update balances of inventory
Can be linked to tills through EPOS (electronic point of sale)
Orders the inventory automatically when it reaches the re-order level
Allows for accurate/constant monitoring of inventory levels
Allows for decisions on slow moving inventory/best sellers to be made by managers from their computer
Can highlight regional variations in inventory

Question 41

Just in Time (JIT)

Answer 41

A Just in time (JIT) inventory control system means a business holds no inventory and only receives raw materials and components when they are required for production. This system is sometimes referred to as ‘Lean Production’.

Question 42

Benefits of JIT:

Answer 42

Lower storage costs since finance is not tied up in inventory.
May lower rent/premises costs since less physical storage space is required.
Working capital may be better used elsewhere in the business and protects cash flow.
Reduced wastage as less inventory is stored.
Reduced risk from perishables spoiling or going past sell by date.
Reduced risk from fashion changes in the market.

Question 43

Costs and risks of JIT:

Answer 43

Relies on good communication/relationships with suppliers to work effectively.
If inventory does not arrive then there will be delays and production may halt completely.
If production halts the business is paying for workers who aren’t producing goods.

Question 44

Centralised Inventory Storage

Answer 44

Centralised storage means that the inventory of the business is stored in a single location, such as a warehouse, rather than in different departments or multiple locations.

Question 45

Advantages: centralised inventory storage

Answer 45

Inventory may be ordered in bulk leading to economies of scale and reduced unit costs.
Suppliers are delivering to one location, so reduced delivery costs.
No space is taken up in departments with storage.
Reduced risk of pilferage as staff may be employed to monitor issues of inventory.
Inventory is maintained in appropriate conditions which reduces waste.
Specialist staff handle stock more efficiently.

Question 46

Disadvantages: centralised storage system

Answer 46

More time is taken to access inventory – ie, physically moving the inventory to department and the paperwork involved.
Additional staff to operate the warehouse increases costs.
Cost of specialist equipment and storage facilities.

Question 47

Decentralised Inventory Storage

Answer 47

Decentralised storage means each department in the organisation is responsible for ordering and storing its own stock.

Question 48

Advantages: decentralised storage system

Answer 48

Inventory is immediately available in departments, so there is no delay in receiving goods.
Smaller amounts of inventory being held means less wastage and spoilage.
Departments are more responsive to local needs and changes in the market.
Avoids costs of staff required to run a warehouse.

Question 49

Disadvantages: decentralised inventory storage

Answer 49

Increased delivery times due to low amounts being delivered to multiple locations.
Increased transportation/delivery increased the carbon footprint of the business.
Less specialist handling of stocks so lower efficiency in inventory handling and processing.

Question 50

Choosing a Supplier

Answer 50

Price offered by the supplier - The price of supplies will have a direct effect on how much it costs the company to produce a product. A higher cost of raw materials will lead to a higher cost of production. If a company can find a cheaper supplier, it could lead to increased profit.

Price offered by competing suppliers – other suppliers may offer a lower price or more attractive terms.

Location and transport costs – The nearer a supplier is located near to the business, the lower are likely to be transport and delivery costs. If the product being supplied is perishable it would be better to source a supplier nearby.

Lead time - This is the amount of time taken between an order being placed and an order being received. Some companies will require inventory to be delivered quickly especially if the products are perishable or the company is using just in time (JIT) inventory control methods.

Product quality - The quality of raw materials will have a direct effect on the quality of a business’s finished product and customer satisfaction. If a supplier has a poor reputation for quality, this may result in a lot of wastage and time lost in production.

Discounts and trade credit offered – Some suppliers may offer attractive terms, such as discounts for regular orders or trade credit offered on materials.

Ability to supply on time - if a supplier does not deliver at the agreed time, this can affect a business’s ability to produce and deliver their product to the customer.

Question 51

Supply Chain Management

Answer 51

Supply chain management (SCM) is the management of the flow of goods and services, from the start of production to the final purchase by the consumer. The business needs to decide the best way to manage the flow of inventory at each process.

Question 52

Corporate social responsibility

Answer 52

Corporate social responsibility (CSR) is when a company aims to act ethically and responsibly to ensure the public perceive them in a positive light.

Question 53

Reducing Carbon Footprint

Answer 53

By taking action to reduce its carbon footprint, a business will improve its reputation and this may attract new customers. Ways of becoming more eco-friendly include:

Using energy and water efficiently.
Reducing waste to reduce landfill.
Recycling and reusing materials.
Using less packaging.
Source from ethical supplies/contractors – to encourage sustainability.
Installing renewable energy technology such as solar panels.

Question 54

Being an Ethical Employer

Answer 54

By demonstrating that it is an ethical employer, a business can benefit from gaining new customers, as well as motivating staff and attracting quality new staff. This can be promoted through:

Paying the minimum wage to employees.
Avoiding the use of zero hours contracts for staff.
Offering better working conditions such as flexible working, gym equipment, showers, etc.
Enabling flexible and home working.
Sponsoring local community events.
Supporting charity work and fund raising.

Question 55

Fairtrade

Answer 55

Fairtrade Standards are designed to support the sustainable development of small producer organisations and workers in developing countries.

Fair trade means that the interests of workers are just as important as other commercial considerations. It is a way of addressing poverty in developing countries, ensuring safer working conditions and stopping exploitation of workers in poor countries.

Question 56

Benefits of fairtrade

Answer 56

The quality of life improves for primary industry workers in poor countries.
Fairtrade certification improves the image of the organisation.
Attracts consumers who have positive attitudes towards products which are ethically produced.
The Fairtrade trademark can be used as a marketing tool.
The trademark shows international standards have been met.
Higher prices can be charged for Fairtrade products.

Question 57

Costs of fairtrade

Answer 57

Fairtrade products can cost more which might put some consumers off buying.
Limits the choice of potential suppliers.
It may increase the firm’s carbon footprint through air or sea transportation

Question 58

Environmental ethics

Answer 58

All businesses must be socially responsible and adhere to government guidelines on how they can operate in terms of their effect on the environment.

By taking action to reduce its carbon footprint, a business will improve its reputation and this may attract new customers. Ways of becoming more eco-friendly include:

Using energy and water efficiently.
Reducing waste to reduce landfill.
Recycling and reusing materials.
Using less packaging.
Source from ethical supplies/contractors – to encourage sustainability.

Question 59

Recycling

Answer 59

Recycling is the process of converting waste material into new materials or products.

Question 60

Benefits of recycling:

Answer 60

Using recycled packaging or recycling waste products helps to reduce production costs.
Helps organisation to meet their environmental aims.
The business save money if recycled materials are used to make new products.
Improves the brand image of the organisation.
Reduces cost because less landfill is required.
Takes less energy to recycle than to extract and manufacture new materials. Can be used as a unique selling point (USP) Recycling can give a business a competitive advantage.

Question 61

Costs of recycling:

Answer 61

Recycled material may reduce the quality of the finished product.
Image of the product may be perceived as inferior.
Some items such as paper can only be recycled a limited number of times.

Question 62

Minimising Packaging

Answer 62

To help the environment and reduce costs, most businesses aim to reduce the amount of packaging they use.

Question 63

Benefits of reduced packaging:

Answer 63

Can reduce production costs as less materials are required for packaging.
Can reduce transport costs as goods are smaller and lighter.
Reduces cost because less landfill is required.
Can improve brand image.

Question 64

Costs of reduced packaging:

Answer 64

Increased risk of damage due to insufficient packaging.
Product may become less attractive to customers.

Question 65

Technology used to support the Operations function

Answer 65

Computer-aided design (CAD)is used in the production of buildings, cars and many consumer products. CAD is mainly used for detailed engineering of 3D models or 2D drawings of physical components, but it is also used throughout the engineering process from conceptual design and layout of products, through strength and dynamic analysis of assemblies to definition of manufacturing methods of components.
Computer-aided manufacturing (CAM) uses machines that are controlled by computers in the manufacturing process. Computer aided manufacturing typically uses software to translate drawings and data into detailed instructions that can drive some sort of automated tool. As an example, a 2D digital drawing can be used to guide a laser or physical cutting tool to cut cladding or other components to fit an architect’s design.
Electronic point of sale (EPOS) computer systems can be used to aid inventory control as an up-to-date record of inventory can be kept electronically and altered with every sale.
Bar codes and QR codes may be used on products to relay information about sales to the warehouse via an ICT system. Then when the inventory reaches a set level or trigger point the business will be alerted to reorder and restock the levels of inventory. Barcodes can be used to aid the delivery process - customers and businesses can use QR codes to track packages.
Databases store information on inventory, which can then be easily searched using queries. Reports can be generated automatically to help aid in the decision-making process.
The Internet can be used by the operations department to find suppliers and compare prices.