Operations Flashcards
List the factors that business should consider when picking a Supplier.
-Price
-Location and Transport Cost
-Lead time (delivery time)
-Product quality
-Reliability and Reputation
-Discounts available
Define the factor ‘Price’ for supplier
The more a business pays for supplies, the higher the production cost will be. Therefore, it should aim to find a cheap supplier as keeping production costs down will result in high profits
Define the factor ‘Location and Transport Cost’ for suppliers
The further away a supplier is from a business, the higher the costs might be for delivering the goods to the business
Transporting goods over a great distance also results in a higher carbon footprint, which is damaging to the environment.
Define the factor ‘Lead time’
Lead time is the amount of time taken between an order being placed and an order being received.
The business should choose a supplier than can deliver within a time frame that is suitable for the business
Define the factor ‘Product Quality’
A business needs to purchase high quality raw materials to make their profit if they want the finished product to also be of high quality.
Having a high quality finished product also means that a business will be able to charge a higher price for it.
Define the factor ‘Reliability and Reputation’ for suppliers
If a supplier does not deliver at the agreed time, or with the correct quality goods, this can affect the business’s ability to produce and deliver their product to the customer
A suppliers with a good reputation will be more likely to fulfil orders on time and provide a high quality product
Define the factor ‘Discounts offered’
A business should consider whether a supplier offers any discounts e.g. bulk buying as it would reduce costs
Outline why it is essential that a business control the level of stock they have in inventory
-To ensure resources are not wasted
-to ensure that stock does not deteriorate or become spoiled
-To ensure production is not stopped and machinery becomes idle
-To ensure understocking or overstocking does not take place
Define ‘Maximum Inventory (Stock) level’
This is the highest level of stock that should be held at any one time
Define ‘Minimum Inventory (Stock) level
This is the stock level that ensures that there will always be stocks available for production, allowing for ordering and delivery times
Define ‘Re-order Level’
This is the level at which new stock should be ordered
Define ‘lead time’
This is the time from placing the order to the good being delivered
What are the advantages of computerised stock control?
-Avoids over-stocking and under-stocking this means that stock levels will be known at all times
-Reduces the need for manual stocking
-Can be linked directly to the supplier meaning goods are ordered automatically
-Stock can be re-ordered automatically when the re-order level is reached. This means that production will not be affected
-Up-to-date stock levels can be found instantly this can provide customers with accurate information and improve customer satisfaction
What are the consequences of understocking?
-The firm may have to place orders more often, this means that high administration costs and the firm may lose out on discounts for bulk buying
-The business may not be able to cope with an unexpected number of orders if stocks are low. This may upset customers who may take their business somewhere else. Also means the business reputation may suffer
-If there is not enough stock, production may have to be stopped therefore sales will be lost. This means less profit as well as having to pay stuff who are doing nothing
What are the consequences of overstocking?
-greater chance of theft by employees meaning an increase in costs as more stock to be bought and lost production if parts are missing
-costs: insurance, heating, lighting, wages of warehousemen, space taken in storage meaning less profit for the business resulting in increased costs
-If social factors change (trends/fashion), the stock might be wasted which leaves the business with stock it cannot sell
-A great deal of cash is tied up as stock is very expensive item this means less money for other areas of the business which could be making a profit
What are the 2 types of production?
-Capital intensive: mostly machines and robots are used in production e.g. car production by robotic machine
-Labour intensive: mainly people are involved in production e.g. skilled chefs in a restaurant
What are the advantages and disadvantages of Capital Intensive production?
Advantages:
Less employee wages and costs, quality can be standardised, the same every time, machines can work continuously 24/7
Disadvantages:
More difficult to customise orders, breakdowns in production can be costly, initial set up costs of machinery are high
What are the advantages and disadvantages of labour Intensive production?
Advantages:
Customised products are easier to make, less expensive machinery costs, humans can use their own initiative and problem solve
Disadvantages:
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
Distinguish between Capital and Labour Intensive Production
-Capital intensive organisations rely heavily on machinery in production whereas labour intensive rely heavily on their workers
-A standard product can be produced more easily with capital intensive whereas individual, one-off products are easily created with labour intensive
Define Job production
This is where a company produces a single product or small number of products to specific customer requirements.
It is a one-off job, each product is completed before the next one is started and is made by hand by highly skilled workers
e.g. a designer wedding dress, wedding/birthday cake
What are the advantages of job production?
-Products are fully bespoke to customers requirements, meaning very satisfied customers
-higher prices can be charged due to the unique nature of products
-workers are involved in all stages of the making of the product, which increases staff morale and motivation
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
Define Batch production
This method involves making products in small groups known as batches.
Products within each batch will be identical however each batch can be different
e.g. a bakery making a range of baked goods
What are the advantages of batch production?
-allows for a degree of customisation by the customer which increases 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
- a mistake in a batch can mean that an entire group of products are ruined, which increase wastage
-Small batches means the cost of product can be high as production has to be halted and changed frequently
-staff can be less motivated this can mean absences, poor quality of work and so lost profit
Define Flow production
Flow production involves ass producing identical products.
Products are made on a assembly line
What are the advantages of flow production?
-mass production of identical products allows the business to achieve high economies of scale
-use of machinery results in higher levels of output and consistency in quality
-very large quantities of product can be made
-The large scale production means the organisation can benefit buying in bulk and obtain discounts so that cost of production is cheaper meaning profits increase
What are the disadvantages of flow production?
-products cannot be tailored to customer requirements
-there is a high initial outlay in purchasing the computers and machinery needed to set up assembly line
-when equipment breaks, the whole production line might need to stop
-employees can be less motivated due to the boring repetitive tasks this can mean poor quality goods, absences and high staff turnover
What are the factors that need to be considered when choosing a production method
-The nature of the product, depending on what is being made one method might be more suitable over another
-Demand for the product, the business will have to choose a method which will allow it to make enough products to fill customer demand
-size of premises, how much space the business has available to make products must be considered. Batch and Flow production need a lot of space
-Availability of skilled labour, the business will have to establish whether there is sufficient skilled labour available
What are the benefits to a Business having High quality goods/services?
-the company’s reputation and image will improve
-a higher price can be charged for the products meaning an increase in profits
-customers will be very satisfied with the product and are likely to return and buy again
-customers are likely to recommend the company to others
What is the method of ensuring quality ‘high quality raw materials (aka quality inputs)’
-The raw materials of the product must be of high quality, the business will have to spend time finding a supplier that can provide the quality they need however a supplier will charge a higher price for high quality materials
-A company’s employees must have the correct level of skills and knowledge to make the high standard of product. To do this staff must be trained
-The machinery and technology used in the production of a company’s products should be well maintained to ensure they function correctly
What is the method of ensuring quality ‘Quality Control’
-This is when the product is checked before and after production to ensure it is meeting the company’s standard
-This method reduces the chance that a faulty/substandard product reaches customers however high amounts of waste as faults in product are not detected till the very end of the process
What is the method of ensuring quality ‘Quality assurance’
-The product is checked for quality are every stage of production
-Very little wastage as faults are identified easily however production takes longer
What is the method of ensuring quality ‘Quality Circles’
-A quality circle is a small group of employees from different levels across a business who meet regularly to discuss how to improve quality and methods of working
-Employees will feel empowered and more motivated as their opinions are being valued however meetings take place during the working day so reduced productivity
What is the method of ensuring quality ‘Benchmarking’
-identifying the company in the market with the highest level of quality and make it a set standard to reach
-can be motivational for staff as it gives them a clear goal to work towards however it can be time-consuming process gathering and studying the necessary information
What is the method of ensuring quality ‘Total Quality Management’
-This is when managing quality is the responsibility of all employees in a business to create a ‘culture of quality’
-advantages: cost reduction, increased efficiency, increased customer satisfaction
-disadvantages: high cost of training, can be difficult and time consuming to introduce
Describe ethical operations
These are moral values that influence how an organisation behaves. As consumers, we expect businesses to do what is fair, honest and right. Therefore it is important for business to ethical
e.g. paying employees the living wage, ensuring high farming standards, avoiding testing products on animals
What are the benefits and costs of ethical production?
Costs
-Costs will be higher when paying the living wage
-Higher farming standards will lead to higher costs
Benefits
-improved reputation and image
-higher prices can often be charged for products which are viewed as ethical
-gaining a competitive edge over rivals
Describe environmental operations
This is when the business considers the impact their operations that their operations have on the planet. Businesses do that by:
-reducing the amount of packaging they use
-minimising the amount of waste created e.g. disposing of it in a safe manner
-recycling as much as possible and making products with recycled materials
-reducing their carbon footprint and levels of pollution
What are the advantages of recycling?
-Items can be reused to make new products
-Takes less energy to recycle than extract new materials
-Limits the items ending up in landfills
-Improves image of an organisation as being environmentally friendly
What are the disadvantages of recycling?
-Need to be sorted into different categories which is time-consuming
-Some items can only be recycled a limited amount of times e.g. paper
-May reduce quality
-Products may be seen as inferior
How is EPOS (electronic point of sale) used in operations?
-By scanning bar codes on materials and products, an EPOS system will be able to automatically keep track of inventory levels in real time as inventory is added and removed
What are the benefits and costs of CAD?
Benefits
-Design can be saved and easily amended therefore saving time
-Customers can see images of what the final product will look like
-Greater accuracy than hand drawing
Costs
-Initial costs of software are expensive
-Staff training is required so employees know how to use the software
What are the benefits and costs of CAM?
Benefits
-Precision in manufacturing process
-Reduced wastage
-Requires less employees
Costs
-Expense in purchasing technology
-Potential industrial action
-Breakdowns can half production
