Operations Flashcards
1
Q
What are the three production methods?
A
Job production, batch production, and flow production.
2
Q
Define job production.
A
Production of a single product at a time, used for small orders, often one-offs. It typically involves a small number of units and a highly skilled workforce, making it suitable for start-ups and labour-intensive processes.
3
Q
What are the advantages of job production?
A
Simple organization, motivated workforce, and the ability to
produce original and unique products according to customer
wishes.
4
Q
What are the disadvantages of job production?
A
High labor costs, lengthy lead times, and potential cost increases as demand rises.
5
Q
Define batch production.
A
Production used when demand is higher and more regular,
involving a number of operations where products are produced in
batches, making it appropriate for manufacturing businesses.
6
Q
What are the advantages of batch production?
A
Flexibility to alter each batch to meet customer wishes, lower
costs due to less need for skilled workers, more standardized
machinery, and quick response to changes in demand.
6
Q
What are the disadvantages of batch production?
A
Potentially more complex machinery, a less motivated workforce,
and money tied up in work-in-progress until the whole batch is
finished.
6
Q
Define flow production.
A
Production organized in a continuous sequence, able to produce
large quantities of simplified and standardized products, and is
typically capital intensive.
7
Q
What are the advantages of flow production?
A
Reduced unit costs due to economies of scale, high automation
reducing the need for labor, and no need to stock large quantities
of goods.
8
Q
What are the disadvantages of flow production?
A
Very high set-up costs, no possibility of producing a wide product
range to meet different customer needs, and costly breakdowns.
9
Q
How to calculate total costs?
A
Total costs (TC) = Fixed costs (FC) + Variable costs (VC)
10
Q
How to calculate total revenue?
A
Total Revenue (TR) = Quantity sold (Q) * Price (P)
11
Q
How to calculate profit?
A
Profit = Total Revenue (TR) - Total Costs (TC)
12
Q
What is contribution?
A
Contribution is the amount of money left over after variable costs
have been subtracted from revenue. The money contributes
towards fixed costs and profit.
13
Q
How can we calculate contribution per unit?
A
Contribution per unit = selling price - variable costs per unit
14
Q
How can we calculate total contribution?
A
Total contribution = total revenue - total variable costs
15
Q
How can we calculate profit using contribution?
A
Profit = total contribution - fixed costs
16
Q
What are cost centres?
A
Cost centres are the departments or units of business that incur
fixed costs but do not contribute to profit directly e.g. marketing or
HR departments.
17
Q
Why is break-even analysis used?
A
Break-even analysis is used to determine what quantity of a
particular good a business needs to produce in order to cover all
the costs of production to break-even
18
Q
How do we calculate break-even using revenue and costs?
A
- Calculate total costs (TC) by adding fixed costs (FC) and
variable costs (VC) per unit times Q (break-even quantity). - Calculate total revenue (TR) by multiplying the price by Q.
- Equate TC to TR and solve for Q. This will be our break-even
output. - Multiply the break-even output by the price to get the break-
even point.
19
Q
How do we calculate break-even using contribution?
A
- Calculate total costs (TC) by adding fixed costs (FC) and
variable costs (VC) per unit times Q (break-even quantity). - Calculate total revenue (TR) by multiplying the price by Q.
- Equate TC to TR and solve for Q. This will be our break-even
output. - Multiply the break-even output by the price to get the break-
even point
20
Q
What is margin of safety in break-even analysis?
A
The margin of safety is the range of output between the break-
even output and the current level of output assuming this level of
output is above the break-even point, over which profit is made.
Business would want to calculate their margin of safety in order
to know by how much sales could fall before a loss is made.
Naturally, the larger the margin of safety the better. We calculate
it by subtracting the break-even output from the current level of
output. Margin of safety Current level of output Break-even output.
21
Q
What are the steps to drawing the break-even chart?
A
- Label the axes
- Draw the line FC
- Draw the TC line
- Draw the TR line
- Youve found your break-even point!
22
Q
What are other uses of break-even charts?
A
Other uses of break-even charts include:
Target profit how many units of output need to be produced to
generate a certain level of profit? Q Fixed Costs Target Profit
Contribution per unit
Break-even price how much do we need to charge for out product
in order to break-even? Break-even price Total Cost Output
Price needed to reach a target profit what price does a business
need to charge in order to reach a target rate of profit? Price
Profit Target Total Cost Output
23
What is the traditional approach to quality control in production
departments?
Quality control traditionally places responsibility for quality on
production departments, ensuring products meet customer
needs, operate correctly, are cost-effective, easily repaired, and
meet safety standards through quality controllers and inspectors.
24
What is Total Quality Management (TQM)?
TQM is an approach focused on improving a business's
effectiveness, flexibility, and competitiveness by preventing errors
in production. It involves quality chains, accountability,
empowerment, process monitoring, teamwork, customer views,
and a zero defects policy.
25
What is Benchmarking?
Benchmarking is a technique used to identify and implement the
best production methods available, aiming for continuous
improvement and long-term quality strategy development within
the TQM approach.
26
Why are Research and Development (R&D) important for a
business?
R&D is important for businesses because it leads to the
development of new products, cost reduction, quality
improvement, and reduced environmental damage.
27
What is Just-in-time (JIT) production?
Just-in-time (JIT) is a production technique highly responsive to
customer orders that minimizes stock holding.
28
What is just-in-time (JIT) stock management?
A production system where stock arrives just in time for
production based on customer orders, minimizing stock holding
and tied-up capital.
29
What is just-in-case (JIC) stock management?
A production technique where more stock is stored in anticipation
of a sudden increase in demand.
30
Why is controlling stock important?
To ensure the business holds the right amount of stock, avoiding
shortages or excessive inventory.
31
What factors do managers determine for stock control?
Maximum stock level, minimum stock level, and the reorder level.
32
What is capacity utilization?
The use that a business makes from its resources. It is calculated
as (Current output / Maximum possible output) * 100.
33
What is outsourcing?
Hiring or contracting another business to do work that was
previously done by the business itself.
34
What are the quantitative considerations when deciding whether
to subcontract production?
Comparing the cost per unit to make the product in-house versus
the price offered by a subcontractor.
35
What are the qualitative considerations when deciding whether to
subcontract production?
Reputation of the subcontractor, their specialization, and
achievement of cost benefits.
36
What is crisis management?
The systematic steps and efforts of an organization to limit the
damage from a sudden crisis (e.g., accident, machinery failure).
37
What are the four factors that influence the effectiveness of crisis
management?
Transparency, communication, speed, and control.
38
Why is transparency important in crisis management?
Stakeholders need to be informed of what is happening and
assured that safety is the priority.
39
Why is communication important in crisis management?
Senior managers need to communicate objectively, avoiding
biased reports to maintain the business's image and reputation.
40
Why is speed important in crisis management?
Senior managers need to act promptly to limit damage, though
rushed decisions should be avoided.
41
Why is control important in crisis management?
The situation should be put under control as soon as possible to
mitigate further damage.
42
What is the focus of contingency planning?
Limiting the damage for different stakeholders
43
How do organizations attempt to deal with a crisis through
contingency planning?
By putting in place procedures to deal with a crisis, anticipating through scenario planning.
44
What are the 4 major factors affecting contingency planning?
Cost, Time, Risk, Safety
45
What is the role of operations management in a business?
Operations management involves planning, organizing,
coordinating, and controlling all activities involved in transforming
inputs into outputs. It is central to what the business actually does
and affects all aspects of production.
46
How can changes in operations impact other business activities?
Changes in operations, such as an increase in output, may
require more employees or affect other functions, illustrating that
operations changes influence other parts of a business.
47
What is an example of how creative production processes can
disrupt the market?
3D printing is an example of a creative production process that is
changing the manufacturing industry and disrupting traditional
market practices.
48
How might operational business changes affect a business's
ethical stance?
Businesses may decide not to operate in very low wage
economies due to ethical concerns, showing that changes in
operations can affect ethical decisions.
49
Why is sustainability important in operations management?
Sustainability ensures efficiency in business operations, for
example through recycling, which can reduce waste and improve
resource use
50
What does the kaizen approach in business management
emphasize about improvement?
The kaizen approach focuses on improvement through a series
of small, gradual changes rather than radical ones. Small
improvements accumulate over time to create significant
revolutions.
51
What are the factors of production mentioned in the syllabus
content?
The factors of production are land, labour, capital, and enterprise.
52
What is meant by the 'transformation process' in operations
management?
The transformation process refers to converting inputs (like land,
labour, capital, and enterprise) into outputs (goods and services).
53
How do operations add value in a business context?
Operations add value by efficiently and effectively converting
inputs into outputs that meet customer needs with the right
quantity, quality, and specifications.
53
What is the difference between effective and efficient operations?
Effective operations mean the business is doing the right thing by
meeting operational targets and producing correct products and
quantities. Efficient operations mean the business is doing things
at a low cost, producing and delivering products cost-effectively
54
Why is good operations management crucial to a business's
success?
Good operations management improves efficiency, increases
output volume, enhances quality, meets market demands
identified by marketing, and leads to more sales and profits. Poor
operations can cause mistakes, recalls, or damages.
55
What are the two main types of goods and services mentioned,
and how do they differ in terms of inventory management?
Physical goods such as cars can be inventoried or stocked,
whereas intangible services like those provided by schools and
hospitals cannot hold inventory, leading managers to manage
queues when demand is high.
55
How does operations management differ between a hotel, a tyre
and exhaust centre, and a clothes shop?
In a hotel, operations involve preparing rooms, meeting kitchens’
health and safety standards, ensuring room appliances work,
washing towels, and having enough food. In a tyre and exhaust
centre, it involves keeping enough spare parts in stock and
ensuring equipment is suitable and functional. In a clothes shop,
it involves having the right number and mix of clothes, an
appropriate store layout, managing queue lengths, and having
security to prevent theft.
55
What are the three main forms of transformation of inputs into
outputs as described?
The three main forms are: 1) Changing the characteristics of
materials, information, or customers (e.g., manufacturers, beauty
salons, doctors, accountants); 2) Changing the location of
materials and information (e.g., delivery companies, Google,
estate agents); 3) Changing the ownership of materials (e.g.,
wholesalers buying in bulk, retailers buying from wholesalers).
56
What important questions must a business consider when
designing its transformation process?
A business must consider: What level of output will be provided
(e.g., units produced or number of customers)? What quality of
service will be provided (e.g., how many served, delivery options,
return policies)? How will the service be provided (e.g., online or
in shops, staffing levels or automation)?
56
In the context of transforming inputs, how does changing
ownership of materials simplify business processes?
Wholesalers buy in bulk from many producers, and retailers buy
from wholesalers instead of dealing with each producer
individually, reducing the number of transactions and making the
process simpler.
56
What does a business need to decide regarding the management
of its operations and outsourcing?
The business must decide which aspects of the process it will
undertake itself and which elements will be outsourced or bought
in from other providers.
56
How can outsourcing affect a business's operations?
Outsourcing elements like cleaning, accounting, or design can
impact the costs, flexibility, and complexity of running the
business.
57
What is inventory in the context of a business?
Inventory refers to the stocks held in a business, including
materials and semi-finished goods.
58
Why is the transformation process in a business described as
ongoing and dynamic?
Because if the output produced is not acceptable or needs
improvement, the business must change the inputs and/or
production methods, monitor results, and make further changes
as necessary.
59
How can external factors influence a business's operations?
External factors, such as increasing environmental concerns, can
influence what is produced and how operations are carried out.
60
What role does 'Land' play in the factors of production within
operations management?
Land involves location decisions and finding the right base for a
business, considering cost, ease of supply access, and is key in
processes like farming or retail site selection.
61
Why is 'Labour' important in business operations?
Labour refers to the number and skills of employees, whose
contribution can be critical, especially in sectors like sport, music,
and computer programming
62
What is meant by 'Capital' in the context of factors of production?
Capital refers to capital goods such as equipment and machinery
that are important in operations, influencing output, quality, and
flexibility.
62
63
How does 'Enterprise' influence business operations?
Enterprise is the ability of employees to generate ideas, solve
problems, and be creative, affecting resource use and the nature
of production and operations.
64
What must operations managers consider when deciding on the
combination of resources for the transformation process?
They must consider the nature of the process, desired targets,
constraints like budgets, and the cost and availability of different
resources.
65
What defines a capital-intensive operations process?
A capital-intensive process has a high proportion of capital goods
(equipment) compared to labour and land in the production
process.
66
What defines a labour-intensive operations process?
A labour-intensive process has a high proportion of labour
compared to capital and land in the production process, such as
clothes manufacture.
67
68
What factors influence the choice between labour-intensive and
capital-intensive processes?
The choice depends on factors such as wage costs, the volume
of production required, and the nature of production (e.g., very
individualized, intricate work may require more labour).
69
Why can the term 'capital-intensive' be misunderstood?
Because 'capital' can mean money or equipment, some think a
capital-intensive business has high money levels, but it actually
means using equipment more than labour in production.
70
How does capital-intensive production typically relate to
production volume?
Capital-intensive production is common when there are large
volumes of production, such as car production.
71
How can operations management affect a business's profits?
Operations management affects profits by influencing the volume
of production, costs, and the quality of the product.
72
How does the efficiency of the operations process affect value
added?
More efficient operations use fewer resources for the same
output, adding more value to the product.
73
Why is cooperation between marketing and operations important?
Marketing identifies customer needs and key benefits customers
want, and operations works to fulfill these needs efficiently while
meeting business objectives.
74
What factors affect the value added by operations in a business?
The amount of resources used and how they are used affecting
cost of production; the efficiency of operations reducing waste
and cost per unit; and quality of production and speed of delivery
affecting customer willingness to pay and sales volume.
75
Why must operations decisions be linked with other business
functions like finance and human resources?
Because decisions in operations depend on what is possible in
other areas, such as finance availability for expansion or human
resources involvement in staff changes, ensuring all functions
work well together for business success.
76
Why is sustainability considered important in modern operations
management?
Sustainability is important because it helps preserve resources,
encourages reusing and recycling materials, reduces waste, and
contributes to long-term business success and environmental
protection.
77
How can high standards in operations management contribute to
a business's sustainability?
High standards in operations management can lead to
sustainable business models by reducing the environmental
impact, conserving resources, reusing and recycling materials,
and minimizing waste, which benefits both the planet and the
business's future.
78
79
What IB Learner Profile traits do effective operations managers
often demonstrate in relation to sustainability?
Effective operations managers are caring about their impact on
the environment, reflective about reducing business damage,
open-minded about change, thinkers considering long-term
impacts, and principled about doing what is right, not just
profitable.
80
What is the significance of creativity in sustainable operations
management?
Creativity is important because it helps develop innovative solutions to meet customer needs sustainably, such as using drones for parcel delivery to overcome distribution challenges like
traffic jams.
81
Define operations management
Operations management is the process of transforming inputs
(land, labour, capital, and enterprise) into outputs that add value.
82
What distinguishes a capital-intensive process from a labour-
intensive process in operations?
A capital-intensive process uses high levels of capital equipment
relative to labour, whereas a labour-intensive process uses high
levels of labour relative to capital equipment.
83
What does 'adding value' mean in the context of operations
management?
Adding value means that the transformation process creates
output worth more than the value of the inputs used to produce it.
84
How can operations impact other business activities?
Operations impact other business activities by requiring
resources such as finance for investments like technology,
disrupting markets through creative production processes,
changing ethical stances (e.g., avoiding long-distance shipping
due to environmental concerns), and influencing sustainability
through efficiency like reducing wastage in production.
85
Explain mass individualized customization and how it differs from
mass production.
Mass individualized customization is a large-scale operations
process enabled by technological advances that combines the
volume of mass production with the ability to customize individual
products for customers. This contrasts with mass production,
which produces standardized items without customization.
86
Define mass customization and explain how it differs from
standard mass production.
Mass customization is large-scale mass production with the
flexibility to produce a variety of different models, adapting to
different customer needs, unlike standard mass production which
produces standardized items.
87
Why is mass customization generally associated with heavy
investment in technology?
Because it uses technology that enables a variety of models to
be produced on the same production line, allowing customization
of features such as types of wheels, interiors, and dashboards.
88
What factors should be considered when choosing a method of
production?
You need to consider the volume of demand (how much will need
to be produced) and the extent to which the product needs to be
adapted into different models or versions versus being
standardized.
89
How does batch production offer more flexibility than mass
production?
Batch production allows relatively high outputs and some
flexibility by producing groups of items together, such as different
magazine titles in printing batches, unlike mass production which
is largely standardized.
89
Why is mass production not appropriate for job production items?
Because mass production requires high volumes and job
production involves unique, one-off items that do not fit mass
production's standardized and high-volume approach.
90
What happens to production methods when moving from job
production to batch and then to mass production?
Moving from job to batch to mass production requires increasing
investment in capital equipment and enables higher volumes if
demand exists, but it reduces flexibility in tailoring products to
customer needs.
91
What characterizes mass or flow production?
Mass or flow production occurs when each item moves
continuously from one stage of the operations process to
another, allowing high volumes of standardized products.
92
What is 'mass customization' and how does it relate to
technological developments?
Mass customization is large-scale production that incorporates
flexibility, enabled by technology, allowing businesses to adapt
outputs and tailor products despite mass production methods.
93
Explain one reason a company might move from job production
to batch production.
To increase efficiency by producing items in groups, reducing
production time and costs compared to making one-off unique
items.
94
Identify one advantage and one disadvantage of changing from
batch production to mass production.
Advantage: Higher volumes and potential cost savings through
continuous production; Disadvantage: Less flexibility to tailor
products to individual customer needs.
95
What is meant by the term 'mass customization'?
Mass customization refers to the flexibility to produce a number
of different models tailored to customer needs, combining
elements of mass production and customization.
95
Define the term 'unit cost' in the context of mass production.
Unit cost is the cost of producing one individual unit of a product,
which mass production aims to reduce by producing large
quantities efficiently.
96
Discuss factors a business should consider before choosing a
method of production.
A business should consider cost efficiency, product variety,
demand volume, quality requirements, flexibility in production,
staff training needs, ethical impacts such as environmental
concerns, and how changes in operations affect other business
activities and sustainability.
97
What is lean production and why is it important in today's global
market?
Lean production is an approach to operations focused on
reducing wastage and increasing efficiency. It is important due to
growing competition and demands for better value, helping
businesses reduce costs or maintain profits despite rising input costs
98
How can lean production affect a business’s pricing and profits?
By being more efficient, a business can lower prices to increase sales while maintaining profits, or keep prices the same and benefit from higher profit margins due to lower production costs.
99
What role does staff training play in lean production?
Staff training is essential in lean production to ensure employees
can perform tasks in the most efficient and standardized way,
following the best methods identified to reduce waste and
improve productivity.
100
How can lean production impact a business’s ethical stance and
sustainability?
Lean production can promote sustainability by using fewer
resources and reducing waste, but may also challenge ethics if,
for example, increased deliveries for lean inventory levels raise
environmental impacts.
101
What is the main aim of lean production in the transformation
process?
Lean production aims to reduce all forms of wastage in the
transformation process and make a business more efficient.
102
Why does any variation from best practice reduce quality and
increase costs in lean production?
Because all variation from best practice leads to poorer quality,
lower productivity and higher costs.
103
What are the five Ss in the lean approach and what is the
primary goal of these principles?
The five Ss are Seiketsu (standardize the approach consistently),
Seiso (keep work area clean), Seiton (organize tools for easy
access), Seiri (keep only key equipment and remove
unnecessary items), and Shitsuke (follow the set ways to
complete tasks). The primary goal is to standardize the approach
so there is a right way of doing things applied consistently.
104
How can the lean approach benefit banking operations?
In banking, lean production makes processes such as cheque
and credit card payment processing more efficient, reducing
wasted time, speeding up money collection, and improving return
on investment.
105
What benefits can lean production bring to hospitals?
Lean production can lower costs and reduce patient-processing
time, which leads to better patient care by making hospital
operations more efficient.
106
Explain how lean principles can save costs and increase revenue
for airlines.
By reducing aircraft turnaround time—such as getting
passengers off and crews ready quickly and designing planes for
faster cleaning—airlines save millions by minimizing wasted time
on runways and airports can earn more from landing fees.
107
What is 'muda' in the context of lean production and why is it
important?
Muda is the Japanese term for waste. Lean production aims to
eliminate all forms of muda—including waste of materials, time,
energy, and human effort—to reduce costs and increase
efficiency.
108
According to Taiichi Ohno, what are some of the seven types of
waste in lean production?
Types of waste include defects (which require rework or cause
disposal), overproduction of goods not demanded by customers
(leading to waste if unsold), and stocks awaiting further
processing or consumption (which tie up idle money).
109
110
Why is overproduction considered a wasteful practice in lean
production?
Because producing items not demanded by actual customers
results in goods that must be reworked, thrown away, or stored
unnecessarily, leading to waste of resources.
111
How do stocks awaiting further processing or consumption
represent waste in lean production?
Stocks tie up money that is idle and not used elsewhere in the
business, representing financial waste and inefficiency.
112
What are some forms of waste that lean production aims to
eliminate?
Lean production aims to eliminate unnecessary processing,
unnecessary motion of employees, unnecessary transport and
handling of goods, waiting for earlier stages of the process,
delays, inventories, mistakes, waiting, and accidents.
113
What are two features of a lean approach to production?
Two features of lean production are aiming for zero waiting time
and zero unnecessary motion or handling in the production
process
114
How can lean production help reduce the costs of a business?
Lean production reduces costs by eliminating waste such as
unnecessary processing, motion, transport, and waiting time,
which lowers time and resource waste and improves efficiency.
115
What are two potential problems a business might face when
implementing lean production?
The business might experience resistance from employees and
partners due to new working methods and training, and the
implementation process may not be quick, requiring changes like
new suppliers and procedures.
116
Why is increasing garment lifetimes important in reducing
environmental impact according to the clothing industry case
study?
Increasing garment lifetimes by an extra nine months can reduce
carbon, waste, and water footprints by around 20 to 30 per cent
each, thus significantly reducing environmental impact.
117
What kinds of waste occur at the design and production stage of
clothing manufacturing?
clothing manufacturing?
At the design and production stage, up to 15 percent of fabric can
be wasted as scraps when garments are cut out as patterns, and
overall supply chain waste includes fabric wasted during fibre
preparation and garment production.
118
What is an example of innovation aimed at reducing fabric waste
in clothing production?
Designers like Mark Liu and Phoebe English are experimenting
with zero-waste pattern-cutting techniques where garment pieces
fit together like a jigsaw to minimize fabric waste.
119
What challenges might schools face when trying to apply lean
production principles to activities like school lunches or
registration?
Applying lean principles may require new suppliers, new ways of
working, and training, which might be resisted by staff and
existing partners, making the process slow and challenging.
120
How does lean production increase business efficiency?
By reducing waste, lean production uses fewer resources to
produce the same output, lowering unit costs and increasing
efficiency measured by output relative to inputs.
121
What are the two financial benefits of greater efficiency from lean
production?
The business can make more profit per unit if prices stay the
same (higher profit margin), or maintain profit margin by reducing
prices due to lower unit cost
122
123
What is the concept behind lean production in relation to
sustainability?
Lean production aims to reduce waste, supporting more
sustainable operations by reducing the usage and wastage of
resources.
124
Name two methods involved in lean production
Continuous improvement (kaizen) and just-in-time (JIT)
manufacturing.
125
What is kaizen and how does it apply to improving quality in
business?
Kaizen, meaning continuous improvement, is the belief that firms
can improve by making small daily improvements in work quality,
leading to significant gradual progress over time.
126
Why do businesses prefer small, regular changes rather than
dramatic changes in quality or performance
Because many small changes over time lead to gradual
improvement, whereas a single dramatic change is unlikely to
cause sudden improvement, as seen in examples like gradually
improving exam grades.
127
How has the French government influenced clothing producers'
responsibilities since 2007?
France introduced a scheme making clothing, linen, and footwear
companies responsible for managing their products during the
decline stage of the product life cycle to reduce waste.
128
How can tiny reductions in unit costs from kaizen affect business
profits?
Tiny reductions in costs per unit can lead to significant increases
in overall profit because many businesses rely on selling large
volumes of products. Continuous small improvements lead to
rising profits.
129
Why is monitoring and evaluating changes important in the
kaizen approach?
Changes must be monitored and evaluated to determine how
effective the improvements are. At each stage, assessments
ensure that actions taken have made the desired improvements.
130
What does Just-in-Time (JIT) production involve?
JIT production involves producing products only to order,
meaning firms produce items only when they know they can sell
them. Components and supplies are bought only as needed,
aiming to minimize inventory levels.
131
What is the primary goal of Just-in-Time (JIT) production?
The goal is to reduce a firm's inventory levels as much as
possible, ideally to have no inventories at all, so that supplies
arrive and are used immediately to produce items that are sold
straight to customers.
132
What are some business demands or requirements of running a Just-in-Time (JIT) system?
JIT requires excellent relationships with suppliers for timely and
perfect-quality deliveries, reliable employees to avoid stoppages
since no inventory backups exist, and a flexible workforce to
respond quickly to changes in demand or employee absences.
133
Why must businesses have excellent relationships with suppliers in a JIT system?
Because suppliers must deliver goods exactly when needed
without delays, and the goods must be of perfect quality since the
business has no inventories to replace faulty supplies. Trust in
suppliers is essential.
134
How does a flexible workforce contribute to JIT production?
A flexible workforce means employees can cover for one another
if someone is ill or if certain production areas have higher
demand. This flexibility helps production respond swiftly to
changes in demand within JIT.
135
What is the primary focus of Just-In-Time (JIT) production?
JIT production focuses entirely on matching supply to customer
orders by producing products to order.
136
What changes does introducing JIT production involve regarding
machinery and employees?
It involves investment in flexible machinery that can switch from
producing one item to another quickly, training employees in
multiple skills (multi-skilling), and ensuring that employee
contracts are flexible to allow movement between jobs.
137
Why must firms using JIT ensure employees are ready to work
anywhere and anytime?
Because JIT production requires flexibility to meet varying
demands for different products exactly when needed, employees
must be adaptable to work in different jobs and locations as
required.
138
How does lean production impact inventory levels and why?
Inventory levels are reduced because lean production does not
keep buffer stock and produces only what is needed to meet
demand.
139
Why does lean production require products to be 'right first time'
and how does this affect quality management?
Lean production focuses on avoiding errors since there is no
buffer inventory to cover mistakes. This emphasis improves
quality by requiring products to meet standards immediately.
140
What is the effect of lean production on efficiency?
Efficiency increases due to savings on inventory costs, less
wasted time and materials, and less disposal of out-of-date
inventory.
141
How does lean production change the relationship with suppliers?
It increases reliance on suppliers, requiring excellent links and
strong working relationships because supplies must arrive just in
time to avoid halting production.
142
Describe the effect lean production has on capacity management.
Production occurs only when there is demand, so capacity
utilization varies and may be lower, with downtime used for
maintenance rather than producing surplus products.
143
What are the new expectations for employees' roles under lean
production?
Employees need to be flexible in both when they work and the
tasks they perform, ready to work as needed and able to handle
multiple job functions.
144
What challenges and investments are necessary to successfully
implement lean production?
Challenges include winning employee trust and respect to take
on extra responsibilities, investing in staff training, having reliable
high-quality suppliers, and investing in technology like ERP
systems to coordinate with retailers and suppliers.
145
What problems can arise from the lean production approach due
to its lack of buffer stock?
Delays or disruptions in supplies can halt production completely,
making the business very dependent on suppliers and
necessitating strong, trustful relationships.
146
What is the importance of trust in businesses that depend heavily
on employees and suppliers?
Trust is vital because employees are in a strong bargaining
position, especially if they go on strike, which can stop production
by cutting off supplies. Employees must feel involved and well
looked-after to maintain good relationships, which is crucial for
businesses using lean production methods.
147
Define the term 'kaizen'.
Kaizen refers to a continuous improvement approach where
businesses constantly seek to make small, incremental
improvements in their processes and operations.
148
Explain one advantage to a business of introducing just-in-time
(JIT) production.
An advantage of JIT production is that it reduces inventory costs
because the business receives supplies only as needed for
production, minimizing waste and storage expenses.
149
Explain one potential disadvantage to a business of introducing
just-in-time (JIT) production.
A disadvantage is that the business becomes highly dependent
on reliable suppliers and smooth deliveries; any delay or
disruption can halt production since there are no stockpiles of
inventory.
150
How might kaizen improve the competitiveness of a business
producing jeans?
Kaizen can improve competitiveness by encouraging continuous
small improvements in production methods, reducing waste,
increasing efficiency, and enhancing quality, which can lower
costs and improve product appeal, giving the business an edge
over competitors.
151
What is 'cannibalistic marketing' in the context of business
location?
It is when a business sets up many branches in the same
location which eats up the profit of other branches, eventually
resulting in too many outlets with no extra trade to generate and
preventing competitors from opening there.
152
What is Total Quality Management (TQM) and what can it
include?
Total Quality Management is an approach to quality
enhancement that permeates the whole organization and can
include quality circles and benchmarking.
153
How does the type of land affect business location decisions?
Different costs and suitability for a business will vary depending
on the type of land.
154
Why must all stages of the product production process be taken
into account in Total Quality Management?
Because the quality of a business depends on the quality of its
suppliers and after-sales services, all stages of the product
production process must be considered.
155
What role does Statistical Process Control (SPC) play in Total
Quality Management?
Statistical Process Control involves monitoring all stages of
production and providing information to all parties involved
156
Who is expected to embrace Total Quality Management in an
organization?
All employees at all levels of seniority and in all departments,
even those not in direct contact with producers and customers,
are expected to embrace Total Quality Management.
157
How does Total Quality Management encourage employee
participation and responsibility?
Everyone is encouraged to take pride in their work, given
responsibilities and recognition, and included in the decision-
making process.
158
List some advantages of implementing lean production and Total
Quality Management.
Advantages include motivating the workforce, reducing long-term
costs, enhancing the company's reputation, improving design and
production of quality products, and creating closer working
relationships with all stakeholders.
159
What are some disadvantages of implementing lean production
and Total Quality Management?
Disadvantages include high costs especially short-term, need for
significant staff training, the time required to change corporate
culture, stress on formal relationships in the business, and
difficulty maintaining over time.
160
Why does gaining certification for recognized quality standards
benefit consumers?
It assures consumers that the quality of products they are getting
has met certain requirements
161
How can meeting national and international quality standards
help a business?
It can enable exports, give a competitive edge, enhance the
image and reputation of a business, act as insurance, lead to
higher profit margins, and save on the cost of withdrawing
products.
162
Why are costs a determining factor in deciding the location of a
business?
Because costs will largely depend on the type of business being
started or relocated, including considerations like land, labor, and
transportation.
163
What factors related to transport influence business location
decisions?
If the business is bulk increasing, it makes sense to locate next to
the market to save on transporting finished items; if it is bulk
decreasing, it makes sense to be close to raw materials.
164
What advantage does familiarity with an area give business
owners when deciding location?
Owners familiar with a location know certain networks, which is
an advantage.
165
Why do Labour Pool Businesses need to consider the type of
workers available locally?
They need to balance the skills and qualifications needed locally
with the type of workers available to ensure the business can
operate effectively.
166
How does the local unemployment rate affect business labor
costs?
A higher unemployment rate means more people want jobs and
are willing to accept lower salaries, thus saving labor costs for the
business.
167
Why is access to services important for a business's location?
It affects the welfare and motivation of staff, which can impact
overall business performance.
168
What is the significance of local suppliers' availability and
reliability, especially those using the JIT system?
Reliable local suppliers ensure timely delivery of materials,
critical for Just-In-Time (JIT) production systems that minimize
inventory costs
169
What kinds of government regulations must businesses consider
when choosing a location?
Labor laws, health laws, safety regulations, advertising rules,
restrictions on sales, and taxes.
170
What are some pull factors that make a business location
attractive abroad?
Improved communication, easier transportation of products
worldwide, dismantling of trade barriers, deregulation of financial
markets, easier money transfers, internet banking, common
investor access abroad, and building collaboration through
multinational companies.
171
How has internet banking influenced global business operations?
It made it easier to keep up with company finances and led to the
digitization of the world's financial markets.
172
What are push factors that make it attractive for a business to set
up abroad internally?
Reducing costs by moving closer to raw materials, accessing
cheaper labor to achieve productive economies of scale, benefiting from more favorable tax regimes, and increasing
market share
173
What are some common barriers a business might face when expanding into international markets?
Language barriers, historical tensions between countries,
different cultural practices, lack of knowledge on regional
networks, local law and politics, time differences and challenges
of working across many time zones.
174
What advantage might a business gain by being the first to enter
a new market?
The business may gain a first-mover advantage by entering the
market before competitors.
175
Why might a business use extension strategies in their product
life cycle?
Businesses use extension strategies when they have reached
saturation points for their products and want to extend the life
cycle of those products.
176
What are defensive strategies in the context of overseas business
expansion, and why might businesses use them?
Defensive strategies involve opening overseas not because of
immediate need but to prevent competitors from gaining a first-
mover advantage, motivated by fears that rivals might steal a
lead, as growth and expansion are key drivers for the business.
177
What is outsourcing and how does it help a business?
Outsourcing is the practice of employing another business to
perform peripheral activities, enabling the main business to focus
on its core activities. It helps cut costs and reduce prices, giving a
competitive advantage.
178
Give examples of common outsourced activities in business.
Examples include marketing advertising agency for above-the-
line promotion, licensing a producer to make part of the product
in production, employing an agency to headhunt staff in HR, and
hiring accountants to run external audits in finance.
179
List some advantages of outsourcing for a business.
Outsourcing can lead to reduced costs, enable the business to
focus on core activities, transfer expertise, increase capacity
utilization, and reduce delivery time.
180
What are some disadvantages of outsourcing?
Disadvantages include becoming too dependent on suppliers,
having less control over the final product, and dilution of the
brand if customers realize the product is not made by the brand
itself.
181
What is offshoring and how is it related to outsourcing?
Offshoring is outsourcing outside the home country, meaning it is
a form of outsourcing where activities are performed abroad.
182
What is one disadvantage of offshoring compared to other types
of outsourcing?
There may be a difference in culture between the companies,
both national and corporate culture.
183
Why can communication be a disadvantage in offshoring?
Communication could be difficult due to differences in culture,
time zones, or distance between the companies.
184
What are some issues related to quality and ethics in offshoring?
Offshoring can lead to issues of quality and ethics because the
company may have less direct control over peripheral activities
done offshore.
185
What is insourcing?
Insourcing is the practice of performing peripheral activities within
the company internally, instead of outsourcing them.
186
What are some benefits of insourcing?
Insourcing can help regain full control and reduce costs of taxes,
labor, and transportation.
187
What is reshoring?
Reshoring is the practice of bringing back business functions to the home country, opposite of offshoring.
188
How can break-even charts assist managers?
Break-even charts help managers visualize profit or loss at
different sales levels and determine key metrics like break-even
quantity, margin of safety, and break-even revenue or cost.
189
Why might stock be held?
Stock might be held because it cannot be sold
190
How can break-even charts assist managers?
Break-even charts help managers visualize profit or loss at
different sales levels and determine key metrics like break-even
quantity, margin of safety, and break-even revenue or cost.
191
What are the components of a break-even chart?
Fixed costs (paid regardless of output), variable costs, total costs
(fixed costs + variable costs), and total revenue (price × quantity).
192
Define location
193
What is the Triple Bottom Line approach in business decision-
making?
The Triple Bottom Line approach requires considering social,
economic, and ecological factors when making business
decisions, emphasizing that businesses should care not only
about financial aspects but also the well-being of local communities and the natural environment.
194
What economic factors must operations managers consider?
Operations managers must respect budgets, minimize wastage,
make further savings, use available resources and raw materials
to their best advantage, and ensure profitability and financial
stability.
195
What does social sustainability require businesses to consider
when making decisions?
Social sustainability requires businesses to take human factors
into account, both internally (workers) and externally (customers
and communities).
196
What is ecological sustainability and how does it influence
business decisions?
Ecological sustainability is the need to consider environmental
factors when making business decisions.
197
What are the key principles of Kaizen?
The key principles of Kaizen are focusing on the process rather
than the end product, using systems thinking to consider the
whole production process (not just parts of it), and ensuring no
blame is attached to any problem.
198
What is a key challenge of implementing Kaizen over a long
period?
The main problem with Kaizen is that it is difficult to maintain over
a long period of time, requiring a high level of commitment and a
sense of loyalty among employees.
199
What is a quality circle?
A quality circle is a formal group of employees who meet regularly to discuss and suggest ways of improving quality in the
organization
200
Why must communication be inclusive in a company hierarchy?
Communication must be inclusive to all levels of the hierarchy so
employees feel comfortable raising problems, comments, and
suggestions rather than hesitating.
201
What is meant by 'maximum percentage of rejection is set' in the
context of quality?
It means there is a limit on the number of products that can be
rejected, aiming to reduce wasteful production and expecting
zero rejects with every product passing inspection
202
describe the handling of waste and rejects in
quality-focused production
Wasteful production is avoided, zero rejects are expected, and
every product should pass inspection, resulting in no waste
production.
203
How does total quality culture differ in its approach to quality
compared to the traditional view?
Total quality culture includes quality from suppliers and after-sale
servicing and expects to halt half production to fix errors,
emphasizing broader responsibility.
204
Who is responsible for quality in a traditional role culture versus
total quality culture?
In a traditional role culture, quality is the responsibility of one
person, often with an autocratic, top-down communication style.
In total quality culture, it is the responsibility of the whole team with democratic, consultative culture and 360-degree communication.
