operations Flashcards
what are the factors influencing the choice of supplier
price, credit terms, quality, after sales service, size of business, reliability, location
why is having too much stock a problem
high storage costs, money tied up in stock where the business could have invested it in advertising or marketing, potential loss of sales, staff coudl potentially steal stock, high security costs
why is having too little stock a problem
could run out of stock, making customers turn to competitors
they could lose out on bulk buying discounts
they would be charged a lot more if they require more stock to be delievered quickly
also, they would incurr administrative costs
what are the tactics for managing stockn
EPOS - electronic point of sales. this uses barcodes
what is JIT
Just In Time. This is when the supplier holds onto the stock eg components of raw materials and delivers then right on time for them to be used.
what are the advantages of JIT
able to cut down storage costs which then allows for cashflow to be improved
allows you to expand production
less vulnerable to fashion changes
closer bond with supplier
what are the disadvantages of JIT
delivery costs will increase
quality checks become responsibility of supplier which is a risk
may lose out on bulk buying discounts
increased volume of traffic on roads, which would then increase pollution, therefore affecting the business’s CSR policy
why is it important to set appropriate levels of stock
having a MINIMUM STOCK LEVEL ensures there is always stock for production and so nothing is wasted
having a MAXIMUM STOCK LEVEL ensures that the business does not incurr of the costs above the maximum level. Also ensures money and storage space is taken up
a REORDER STOCK LEVEL has to be set so they know when they should order in more stock
a REORDER QUANTITY LEVEL has to be set so the organisation knows how much stock is needed
what are the factors that have to be taken into account when firm sets efficient stock levels
storage space available cost of storage money tied up in stock security of holding stock ordering and delivery time daily usage lead time amount of stock required to bring stock level back to a minimum
what is rate of consumption
how much stock you use on a daily basis
what is maximum level
the costs that you don’t want to incurr with if you go above the maximum level
what is minimum level
costs below minimum level that you don’t want to incurr with
what is lead time
the amount of time between ordering it and recieving it
what is reorder stock level
the time when you have to restock enough to not fall below the minimum level
what is buffer stock
the amount of stock between 0 and the minimum level
what is reorder quantity
the amount of stock you have to order in
what are the advantages of computerised stock control
removes human error which in turn reduces waste and cost
able to calculate reorder level of stock
money is saved since you don’t use human labour
less stock therefore wastage is minimised
what are the disadvantages of computerised stock control
makes staff redundant then staff morale can lower
equipment is expensive
system usually only works if there is a trend in products sold
what are the methods of distribution
job production
batch production
flow production
what is job production
unique, one off products that meet customer’s requirements and needs. it is labour expensive
what are the advantages and disadvantages of job
adv
allows firm to charge high price as it is made to customers needs therefore high profits
customers are usually loyal as product tailored to their needs
staff are motivated so morale is high
disadv
labour expensive
firm does not have chance to bulk buy so they can’t achieve economies of scale
high wastage costs
wide variety of tools - expensive
what is batch production
group of similar products manufactured
what are the advantages and disadvantages of batch
adv
wider customer range so more customers satisfied therefore more profit
less skilled labour is required so labour costs arent so high
disadv
delays occur as machinery stopped and changed causing wastage of time
less interesting than job, so staff morale may be low
stock between stages may get damaged
what is flow production
product made 24/7 on line continouosly
what are the advantages and disadvantages of flow
able to bulk buy so able to exploite economies of scale
reaches mass market
quality able to be measured to highest standard
disadv
product highly standardised so prevents high price from being charged
expensive to purchase equipment
staff may become unmotivated
production line cannot be altered to meet customers needs
what is labour intensive
majority of production is undertaken by labour
what is capital intensive
majority of production is undertaken by machines
what are the factors influencing methods of production used
size of market - firm deals with large market eg large and varied so wont be able to vary product - flow/batch
amount of finance - if firm has a lot of money then they can buy machines to help production
product - one off, groups, large amount of prod
price - if product very expensive to make - job
if firm has up to date tech then they can use flow
what are the quality techniques
quality control quality assurance benchmarking quality circles quality management training quality materials
what is quality control
when you check product at end stage
what is quality assurance
when you check the product at every stage
what is benchmarking
when firm looks to the ‘best in field’ and tries to follow what they do so they become like them
what is quality circles
groups of staff who discuss how product could be improved
what is quality management
when whole organisation improves quality of service provided
what is training
ensuring all staff are familiar with job and ensuring waste is being minimised
what is quality materials
buying materials from reputable supplier
why insist on quality
crucial part of firms image builds a good rep gain competitive edge over comp reduce after sales costs reduce waste attract big investors attract staff
what are the costs of quality
training of staff of how to work with systems such as JIT - costly
better raw materials cost extra
extra paperwork
cost of change of procedures eg hiring new manager
what are the advantages of quality circles
quick identification of problem
instant feedback from management
acknowledgement of a worker’s suggesstion raises morale
encourages more open style of management
what are the disadvantages of quality circles
groups not always productive
managers need to be trained so they know how to handle these groups
loss production
what are the adv and disadv of quality assurance
easier to isolate issues
disadv
stopping of line can be costly
time consuming
what are the adv and disadv of quality control
less time effective than assurance as you check at end
disadv
difficult to isolate factors
can lead to waste/costs to rework substandard products
what are the factors influencing methods of distribution
firm will need a lot of trust in supplier before awarding HIT initiative
firm has a lot of money then they can afford own regional distribution warehouses
small high volume expensive components will be distributed by air as they are light coming from long distance and price will justify flight costs.
