Operations Flashcards
5 things included in inventory control diagram
Maximum inventory level
Reorder level
Minimum inventory level
Lead time
Re-order quantity
What is maximum inventory level
The highest amount of inventory held at any point in time.
It depends on demand, storage space, finance and the type pf product
Prevents overstocking
What is minimum inventory level
The lowest level of stock held at any point in time.
It depends on demand and lead time
Prevents understocking
What is the reorder level
Point a new order is generated with the supplier.
Set between maximum and minimum levels.
What is lead time
The amount of time taken between placing the order with the supplier and receiving the delivery
What is reorder quantity
The amount of inventory received in an order
Maximum level- minimum level at delivery
What is Just In Time inventory management
An inventory management system that involved receiving materials as they are required in the production process
(Or when order is placed by customer)
5 advantages of JIT
-reduce costs of storage and security
-no money tied up in inventory- helps to improve cash flow and cash is available to use elsewhere
-reduced wastage as less risk of stock going out of date
-business can be more responsive to external factors e.g social trends
-easier to monitor inventory- less chance of theft.
4 disadvantages of JIT
-delays in receiving stock orders from suppliers will lead to production stopping.
-lose out on economies of scale as fewer bulk orders
-frequent deliveries of materials increase admin and delivery costs and increases carbon footprint (damages reputation)
-difficult dealing with unexpected changes in demand which will reduce sales
What is centralised storage
Storing inventory in one central location in a large warehouse
What is decentralised inventory storage
Storing inventory in locations close to where they are needed for production/ sales
4 advantages of centralised storage
Order in large quantities so benefit from economies of scale
Security is easier to manage in one central location (specialist staff)
One delivery made which reduces delivery costs and carbon footprint
One location reduces waste of perishable goods due to stock handling procedures
3 disadvantages of centralised storage
Specialist equipment needs to be used- expensive initial investment
Time delay to move stock from central location to other divisions
Inventory order for whole organisation may not meet the needs of all divisions
3 advantages of decentralised storages
Lower levels of stock will not require any specialist equipment- decreases costs
Inventory is located where it is required for production- no time delay
Inventory orders are specific to divisions requirements
4 disadvantages of decentralised storage
Order in small quantities so do not benefit from discounts
Security will be required for all locations increasing costs
Delivery needed to multiple locations will increase costs and carbon footprint
Items may sit unused or unaccounted for and result in waste.
5 advantages of inventory control
Automatically updates the inventory balances- accurate inventory levels are available
When reorder level is reached the system automatically places order with supplier- less chance of understocking
It’s a deterrent to staff to prevent theft- due to managers being able to pinpoint discrepancies quickly
Can highlight changes in demand- helps with decision making e.g slow moving stock to get a promotion
Can be linked to EPOS on tills- updated with every sale and links marketing data
Features of labour intensive production
4 advantages
4 disadvantages
Produced mainly by human workers can be customised
+less expensive machinery costs
+workers are motivated
+high customer satisfaction
+can charge a premium price for products
-skilled workers need paid high
-lower output
-skilled workers need trained- takes time
-quality of products can vary due to expertise of the worker
Featured of capital intensive production
4 advantages
4 disadvantages
Produced by machines/ robots and standardised
+machines can carry out repetitive tasks that humans would find boring
+mass production
+quality can be standardised
+can carry out dangerous tasks- reduced accidents
-breakdowns can be costly
-high initial set up cost
-employees may become demotivated
-more difficult to customise orders
6 reasons for choice of method of production
Include description
Finance available- large amounts of capital available would allow purchase of machinery for CI
quantity- if large quantities are required then it is suited to CI- mass production
Product type- if the product requires customisation then it would be best suited to labour as CI only produces identical products
Skills of labour- if workforce is highly skilled their expertise will be best suited to labour intensive
Technology available- if no access to tech for CI then labour intensive is only option
Costs of production- if reduced variable costs are required for CI then labour intensive is the only option.
6 reasons why quality is important
decreased customer complaints- motivates staff- less employees required to deal with issues
increased customer satisfaction- builds customer loyalty- increases sales
win awards- gives USP- improves competitiveness
Reduces wastage- decreases costs- reduces waste to landfill- environmentally friendly
positive reviews- good reputation- attract new customers
can charge a premium price- increased profits
what is quality control
3 advantages
2 disadvantages
checking raw materials at start of production and finished goods at end of production
+prevents faulty products from going on the market
+prevents product recalls- improves image
+less complaints
-high wastage as mistakes not found until the end
-costs of salaries for quality inspectors
what is quality assurance
1 advantage
1 disadvantage
checking quality throughout production
+mistakes found earlier, reducing wastage. (less costs/ more environmentally friendly)
-more time consuming to have additional checks which may hinder productivity levels
what are quality circles
3 advantages
2 disadvantages
managers and employees come together to discuss production and how to improve it
+employees are the best people to get advice from as they work there
+improves employee relations as employees feel valued
+employees feel empowered- increasing motivation
-employees are not on shop floor while giving feedback- reducing productivity
-disagreements may arise which slows decision making
what is benchmarking
3 advantages
3 disadvantages
finding the best competitors in the industry then copying their standard of work and adding a USP to go beyond it.
+sets targets for employees- motivates them
+imporves competitiveness- increase market share
+improves performance and quality
-access to competitor info can be difficult to get
-time consuming to study techniques and collect info- slow to respond to changes in the market
-only as good as the benchmark unless USP is added
what is quality management
3 advantages
3 disadvantages
aims to have 0 defects through a holistic approach- all employess and managers are involved
each person is treated as if they are the customer
+very little waste as perfect first time
+improved customer satisfaction
+employees/ managers empowered- high motivation
-very high costs for quality inputs
-time consuming to implement as you have to change culture and production process
-puts pressure on employees to continually check/ meet standards
what is a mystery shopper
3 advantages
4 disadvantages
hired by the business but unknown to employees. They act as a customer and take details of the experience they receive
+feedback is non-bias as the mystery shopper is independant
+info provided can lead to improvements
+mystery shopper not allowed to share feedback with the public so no risk to reputation
-not fully representative as mystery shopper only goes once
-subject to human error
-expensive to employ mystery shopper as they require payments
-demotivating for staff and add additional stress
what is a kitemark
a UK based quality trade mark issued by the British Standards Institute BSI
what is ISO
worldwide quality standard issued by the International Organisation for Standards
what is the CE mark
shows a product has met EU health, safety and environmental standards
4 advantages of quality standards
give customer reassurance of quality/ safety
can be used as a promotional tool
higher prices can be charged
less complaints
-higher customer satisfaction
-increased brand loyalty
5 disadvantages of Quality standards
time consuming and expensive as processes need to be completed
may have to alter operations to implement systems to maintain the standard
increased costs for quality inputs to maintain standard
if the standard is not met in the future the award is remove- negative publicity/ reputation
regular audits will take place which may disrupt operations
5 ways of operating ethically
using renewable energy (solar/ wind power)
use susttainable materials or fairtrade materials
avoid child labour
donate to charities
pay fair wages and offer fair working conditions
reduce carbon footprint by suing local suppliers or electric vehicles
recycle/ reuse materials/ reduce packaging- reduces waste going to landfill.
6 advantages of operating ethically
-reduced costs because there is decreased wastage/ because own energy is being generated
-USP which improves image and will attract ethical buyers
-win awards
-meet government targets
-can charge higher prices
-attract employees with ethical values
6 disadvantages of ethical operations
-recycled materials may reduce quality
-high capital investment e.g setting up solar panels
-limited choice of suppliers
-less packaging increases risk of damage to product
-may need to alter operations to accomodate changes e.g removing hazardous chemicals- may involve staff training
-renewable energy relies on natural environment- unpredictable
how is EPOS used in operations
can link to inventory levels to keep inventory levels up to date
bar codes are used to track deliveries
how are spreedsheats used in operations
can record management of inventory levels to monitor usage and to ensure no understocking/ overstocking
how is the internet used in operations
compare prices of supplies
order raw materials online (e-procurement)
how is email used in operations
send a message to a supplier about raw materials
communicate to a customer during order process e.g while order is being processed and dispatched
how is database used in operations
keeps records of inventory and produce reports on inventory usage
how is GPS used in operation
helps delivery drivers find addresses
allows customers to track the location of their delivery
what is computer aided design (CAD)
2 advantages
3 disadvantages
a software package used to create 3D designs or technical drawings
+designs can be seen from all angles and in 3D
+can be edited and amended without having to redraw
-expensive to purchase and install
-updates could take time, delaying work
-employees need training to keep skills up to date
what is computer aided manufacture (CAM)
4 advantages
3 disadvantages
software is used to control machines in production e.g automated/ robotic manufacture
+no human error
+24/7 production
+saves labour costs as less/ no employees
+can do more dangerous tasks
-expensive to install, set up and maintain
-if technology breaks down production stops
-frequent updates required/ reprogramming delays production
think CAPITAL INTENSIVE
