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BUSINESS STUDIES (COMPONENT 1) > OPERATIONS > Flashcards

OPERATIONS Flashcards

1
Q

Define quality

A

The ability of a product or service to meet customers expectations

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2
Q

What can customer interpretation of quality be influenced by?

A

Price
Brand
Customers personal expectations and experiences

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3
Q

What are things to consider when measuring the quality of a good?

A 
Aesthetics 
Features (eg physical attributes)
Core aspects (ie basic functions
Added extras 
Augmented aspects (ie warranty)
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4
Q

What are things to consider when measuring the quality of a service?

A

Friendliness of staff
Speed of service
Efficiency of service
Appearance of environment

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5
Q

How can managing quality effectively give a business a competitive advantage?

A

Lower unit costs due to less waste
Positive brand image to consumer (through word of mouth)
Develop USP
Motivated workforce

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6
Q

Why is it difficult to improve quality?

A

Reluctant of employees to adapt to change or take an additional responsibility
Requires fin ace to invest in training and test and implement new systems
Once achieved must monitor and review regularly to ensure standards are being maintained

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7
Q

What are the two methods of managing quality?

A

Quality control

Quality assurance

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8
Q

What is meant by quality control?

A

Checking of a good or service before it is delivered to a customer
-at end of the process
Usually carried out by specialist inspector

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9
Q

What are advantages of quality control?

A

Quality monitored- reputation monitored
Stops faulty products reaching customer
Common problems can be identified- make changes (eg more training)
Inspector takes responsibility

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10
Q

What are disadvantages of quality control?

A

Takes responsibility away from operatives (may become demotivated)
Requires specialist/additional personnel (could be expensive to hire)
Wasteful- problems aren’t identified till the end (can’t make changes throughout)

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11
Q

What is quality assurance?

A

Checking of product or service at each stage of its production by each worker
-along production line
Relies upon self-checking

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12
Q

What are examples of recognised quality companies?

A

Red tractor (food standards)
ABTA travel
Toy and hobby

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13
Q

What are advantages quality assurance?

A

Spots faults early saving resources being wasted at next stage of production process (decrease waste costs)
Motivate workers as responsible for ensuring quality standards are met- due to empowerment
Increase reputation of business as less chance of faulty goods reaching customer

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14
Q

What are disadvantages of quality assurance?

A

Requires training and high levels of staff commitment (increase costs)
Can slow down production process and labour productivity leading to higher unit costs
Opportunity cost of managers time when initially implementing the systems and procedures

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15
Q

Define total quality management (TQM)

A

Creates quality through continuous improvement, development of systems and products and by creating an organisational culture of quality

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16
Q

What are the methods of achieving TQM?

A 
Empowerment 
Monitoring
Teamwork 
Quality chains 
Zero defects 
Benchmarking 
Quality circles
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17
Q

How does empowerment achieve TQM?

A

Process of enabling, by providing the necessary resources and skills, and allowing employees to take responsibility and show initiative
Employees accountable for quality of their own task

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18
Q

How does monitoring achieve TQM?

A

Process of measuring employee performance and ability to meet quality targets
Linked to rewards and sanctions

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19
Q

How does teamwork achieve TQM?

A

Give groups of employees responsibility for working together to ensure quality targets are achieved
Sense of belonging and accountability can increase motivation (Mayo)

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20
Q

How does quality chains achieve TQM?

A

Chain from supplier, production to customers and everyone in the business
Each level of chain should see themselves as ‘internal customers’ therefore everyone is is responsible for high quality

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21
Q

How does zero-defects achieve TQM?

A

Getting it right first time very time
Responsibility of each worker
Eliminates costs of error

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22
Q

How does benchmarking achieve TQM?

A

Process of identifying best practice, normally within industry

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23
Q

How does quality circles achieve TQM?

A

Informal group f workers who volunteer to meet on regular basis to discuss issues in workplace
Emphasis on improvement of quality
Increased employee participation leads to higher motivation

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24
Q

What are advantages of TQM?

A 
Improved quality 
Improved productivity 
Motivated workforce (e.g. empowerment and teamwork)
Reduced waste through zero defects 
Increased profitability
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25
Q

What are disadvantages of TQM?

A

Workers may lack self discipline (linked to theory X managers)
Senior management may lack patience- TQM not quick
Concentrating on reducing defects not meeting customer need s

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26
Q

What is a chain of production?

A

Various stages, from raw materials to finished products, that the goods pass before being sold to the customer
Links to primary, secondary and tertiary sector together and relies on interdependence of sectors

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27
Q

What is added value?

A

Difference between costs of inputs and the price customers are willing to pay for finished goods
Creates surpluses to pay wages and overheads

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28
Q

How does technology improve operational efficiency?

A
  1. information technology
  2. automation
  3. design technology
  4. robotics
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29
Q

What are examples of internal information technology?

A

Interdepartmental
Order processing
-e.g. waiters using hand devices to transfer orders to the kitchen
Quality data
-e.g. telling production workers about number of defects

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30
Q

What are examples of external information technology?

A

Working with suppliers
-using electronic data interchange to process orders
Sourcing suppliers
-growth of the internet to find new suppliers
Tracking of supply chain

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31
Q

Define automation

A

The use of machines to control processes (e.g. stock central, production line)

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32
Q

What is computer aided manufacturing?

A

CAM

Use technology to control aspects of the production line

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33
Q

What is stock central?

A

More accurate predictions of stock usage through statistical analysis
Automatic control of stock levels and reordering
Retailers use EPOS (electronic point of sale)
-barcodes
-scanners
-database

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34
Q

Define design technology

A

The use of computers in the design of developing a product
-CAD (computer aided design)
-used in may professions including architecture
Designs can be easily altered

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35
Q

Define robotics

A

The programming of robots to carry put tasks more traditionally completed by humans
E.g:
-production processes (e.g. sterilising bottles)
-logistics (packaging)
-quality assurance (e.g. weighing and testing)

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36
Q

What are advantages of using technology?

A

Save money
Better quality
More efficient production
Safer

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37
Q

What are disadvantages of using technology?

A

Lacks expertise

Unforeseen expenses- breakdown costs etc

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38
Q

Define ‘job’ as a method of production

A

One single item produced from start to finish without much chance of a repeat order

  • likely to be one off
  • skilled workers required
  • e.g. wedding cakes, extensions
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39
Q

What are pros of ‘job’?

A

Flexible
Motivated workers by variety of tasks
Simplified organisation as one job at a time

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40
Q

What are cons of using ‘job’?

A 
Higher labour costs due to specialised staff 
Expensive to set up 
-variety of tools
-machines required 
Long time to produce
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41
Q

Define batch production

A

Large quantities of identical products are produced, which can then be altered which satisfy demand

  • loses individuality of product
  • efficiency gains over larger output (economies of scale)
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42
Q

what are pros of batch production?

A

Flexibility- batch can be changed
Decreased need for skilled employees as workers can focus on one action
Stocks of partially finished goods can be stored, which will help respond to quickly respond to change sin demand

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43
Q

What are cons of batch production?

A

High set up costs fr machinery
Workforce less motivate as repeat operations may cause boredom
Small batches still have high unit costs

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44
Q

Define flow production

A

Continuous manufacturing where products pass from one operation to the next
Usually mechanised process

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45
Q

What are pros of flow production?

A

Increased productivity as machinery not subject to labour laws
Gain from economies of scale
Low labour costs

46
Q

What are cons of flow production?

A

Very high set up costs
Breakdowns are very costly
Regular need for inspection of machinery

47
Q

Define productivity

A

A measure of the efficiency with which firms turns production inputs into outputs

48
Q

Whats the formula for labour productivity?

A

Total output/total number of workers

49
Q

How do changes to the workforce improve productivity?

A

Division of labour
Motivating workforce
Reduced absenteeism
Increased training to create multi-skilled employees

50
Q

How do changes to the production process improve productivity?

A

Improve technology
Increase scale of production
Standardisation of process

51
Q

Why may there be difficulties in increasing labour productivity?

A 
May impact negatively on quality and customer satisfaction
-damage long term rep 
-increase waste affecting unit costs 
Employees job satisfaction 
-working harder for same pay
52
Q

Define capacity

A

Maximum amount of output achievable if all resources are fully utilised
A business will aim to match capacity to demand

53
Q

What is the formula for capacity utilisation?

A

Actual production/potential production x100

54
Q

What are methods of utilising capacity efficiently?

A

Under-utilisation

Over-utilisation

55
Q

Describe under-utilisation

A

Increase demand
Downsize (e.g. sell off assets)
Lease any spare capacity

56
Q

Describe over-utilisation

A

Decrease demand
Outsource parts of the business operations (get another company to do some production)
Increase capacity by investing in more resources

57
Q

Define lean production

A

Refers to a range of operational practises associated with or inspired by Japanese manufacturing firms designed to reduce waste and maximise efficiency

58
Q

What does LP consist of?

A
  1. Kaizen
  2. Just in time
  3. Time based management
  4. Cell production
59
Q

Describe Kaizen as a component of Lp

A

A system that concentrates on small, but frequent, improvements in every aspect of the production process

  • all members of workforce involved
  • requires highly motivated and committed workforce
60
Q

Describe just in time as a component of LP

A

A stock ordering system that involves deliveries taking place just as stocks are required and therefore eliminates the storage of stocks

61
Q

When is JIT appropriate?

A

Good relationship with supplier
Reliable production technique to avoid bottlenecks
Close relationship with customer

62
Q

What are the three ways stocks can be held?

A

Raw materials
Work in progress
Finished goods

63
Q

What are benefits of holding stocks?

A

Less costs in holding stocks
Less working capital required
Less obsolete or ruined stock
Lower associated costs (e.g. security and insurance)

64
Q

What are difficulties with holding stocks?

A

Little room for error
Very reliant on suppliers
Unexpected orders harder to meet
High initial set up costs

65
Q

Define cell production

A

Form of flow production whereby the production line is split into series of self-contained groups

  • depends on staff being welcoming trained
  • each member of the cell works as a team to achieve goals and ensure quality standards are met
66
Q

Define time based management

A

A technique that recognises the importance and cost of time

  • seek to reduce time wasted in production process and reduce time taken to produce a good or service
  • requires flexibility in all resources including machinery and staff
67
Q

What are benefits of implementing LP?

A

Cuts stock levels
Shortens delivery time- improved rep
Defects per machine/person drops- improved image, customer loyalty
Finds waste saving measures- decrease costs- could increase R&D or cut prices for competitiveness

68
Q

What are problems with implementing LP?

A

External factors/exogenous shocks (e.g. traffic, snow, etc)
Good relationship with suppliers is often difficult to cultivate
Costly to implement particularly with small firms
Cultural change is long term

69
Q

What are problems with LP philosophy?

A

Focuses on production at expenses of other areas
Lp produced goods to demand rather than anticipating the future needs of consumers
Commitment needed at all levels and without the pressurised environment could lead to high staff turnover
Assumes workers are theory Y

70
Q

What are the roles of the purchasing department?

A
  1. ensure correct levels of stocks to meet the needs of the production department
  2. ensure stocks bought are of a sufficient quality and deal with returns of those that are not
  3. ensure stock is bought at a competitive price
  4. ensure stocks delivered to correct location
  5. ensure stock ration occurs
71
Q

How does price affect your choice in supplier?

A

Strive to keep unit costs low
As result, can pass on cost savings to customers in form of lower prices, or enjoy high profit margins
Important not to jeapordise quality

72
Q

How does payment terms affect choice in supplier?

A

Vary dependent upon the relative sizes of the firms and also nature of product or service
Payments can be upon delivery, pre-agreed credit terms, payment plan, etc

73
Q

How does quality affect choice of supplier?

A

Has direct effect on quality of finished product

May impact operational efficiency- need to rework damaged goods

74
Q

How does capacity/reliability affect choice of supplier?

A

Supplier may not be able to meet demand

May not be able to deliver on time

75
Q

What are examples of types of stocks?

A

Raw materials
Partly finished goods
Finished goods
Service stocks (e.g. stationery parts)

76
Q

What are results of too much stock?

A

Tying up cash in stock- opportunity costs and costs including warehousing, insurance, security, etc
Potential loss in value of stock
Potential risk of being left with unsellable stock- demand drop off, seasonality, etc

77
Q

What are the results of a lack in stock?

A

Unfulfilled demand- loss of sales, loss of customers as cannot meet orders
Customer loyalty ruined, reputation affected
Increased pressure on workers when stock finally arrives
Subcontracting to another business therefore losing control over quality

78
Q

Define maximum stock level

A

Maximum amount of stock a business would wish to hold

The amount of stock a warehouse can hold

79
Q

Define re-order level

A

This acts as a trigger point, so that when stocks fall to this level, the next order should be placed

80
Q

Define lead-time

A

Amount of time between placing the order and receiving the stock

81
Q

Define minimum stock level

A

Minimum amount of product the business would want to hold in stock

82
Q

Define buffer stock

A

AN amount pf stock held as contingency in case of unexpected orders so that such orders can be met and in case of any delays from suppliers

83
Q

why are stock control charts unlikely to represent real life?

A

Orders may be later than expected
Stocks may be used more quickly than expected
Possible machine breaks which will halt production
Stocks may last longer than expected
Cash flow problems may limit stock orders
Firms may expect shortages so buy more now

84
Q

Desc rice the theory of just in case

A

A stock ordering system that involves a large buffer stock of items just in case an order comes in
Commonly used in manufacturing where companies are less efficient

85
Q

What are key features of just in case?

A

The re-order level is often very high
The lead time can be much longer
Buffer stock is large

86
Q

When is JIC appropriate?

A

If stock is non-perishable- food that can be stored for a long time
Where stock holding costs are low- could be small items or minimal value
When orders are impromptu and are needed urgently

87
Q

What are advantages of JIC?

A

Can meet sudden increase in demand as have spare stock
Lower risk if there are problems with supplier
Buy bigger quantise and may get price reductions; less transport costs as less deliveries

88
Q

What are disadvantages of JIC?

A

Holding stock that might go out of date or need to have price reduced to sell
Higher stock holding costs

89
Q

Define innovation

A

When a new idea or invention is launched onto the market normally with a view for. a competitive gain

90
Q

What are the two ways of innovation?

A
  1. product- occurs through adapting a product that already exists or developing a brand-new product
  2. process- changing a process of production that already exists or putting into practise a brand-new production process
91
Q

What is innovation the result of?

A

R+D

-which is the scientific research and technological development of new products and processes

92
Q

What is the purpose if innovation?

A

Firms cannot afford to stand still in competitive markets-todays innovation are tomorrows cash cows and stars
A firm that comes up with the right innovation can guarantee future income if its protected by a patent
Although expensive, the alternative of losing future markets might be worse

93
Q

What are possible risks involved in innovation?

A

Firms can make substantial losses if innovation fails
Other companies are likely to react with their own innovations
Legal implications often arise with other firms questioning whether the product is really an innovation

94
Q

What are pros of innovation?

A

Creates USP for the product
Less competition due to patent
More efficient and cost-effective production process
Likely to be a premium product with high prices

95
Q

What are cons of innovation?

A

Can be very costly in R+D stages and there a drain on resources
For all innovations there is an opportunity costs
Few innovations see light of day so the firm is effectively financing waste

96
Q

Define research

A

The inquiry and discovery of new ideas e.g. lab research, product evaluation, etc

97
Q

Define development

A

Changing ideas into commercial products

98
Q

What is the design and development process?

A
  1. identification of problem
  2. research
  3. development of new ideas and solutions to solve the problem
  4. development of prototypes
  5. final design
  6. testing
  7. manufacturing and launching
99
Q

What us the purpose of R+D?

A 
Solving problems 
Product development 
Reducing production costs 
Developing raw materials 
Reducing environmental damage
100
Q

What are benefits of R+D?

A

Competitive advantage
-new product or materials- particularly if protected by patents
New production technique
-e.g. CAD/CAM- can be safer, cleaner, higher levels of productivity
Image (USP)
Motivation
-satisfies higher order needs such as esteem
Consumer benefits
-more choice potentially lower prices

101
Q

What are drawbacks of R+D?

A

Cost
-R+D expensive, opportunity costs
Requires increased scale of production
Likelihood of negative cash flow in short run to fund ‘problem child’ products
New ideas potentially open for competition to copy

102
Q

What does the success of R+D depend on?

A

Nature of industry- some industries require more (e.g. car industry)
Competitors reactions
Whether a firm ca protect their inventions in some way (e.g. patent)
Money and time available
Skills of workforce carrying out R+D
Short term costs with potential long-term rewards

103
Q

Why do small firms survive?

A

Nice market
Flexibility in hours
Local
Lower costs/ barriers of entry

104
Q

How can you measure the size of a company?

A
  1. sales turnover
  2. number of employees
    -micro= max 9
    -small= max 49
    -medium= max 249
    -large= 250+
    Profit
    Amount of capital employed (return on shareholders investments
    Market share
    Market capitalisation
105
Q

What are problems with market capitalisation being a method measuring the size of a company?

A
  1. share prices changes all the time (demand may fluctuate)

2. method only applies to PLCs

106
Q

Why do firms need to grow?

A

Survival (staying small means costs are too high, essential to avid takeovers)
Increase profitability
Gain market share (monopolies= 25% market share)
Reduce risk (diversifying allows risk to be spread across numerous products- multiple product lines to fall back on if failure occurs)

107
Q

Define economies of scale

A

Occur when there is a fall in average costs as the sales of production increase (when business grows)

108
Q

What is the formula for average costs?

A

Total costs/output

109
Q

What are internal economies of scale?

A

Occur when an individual firm grows in size (increase output) and so benefits from lower average costs
Affects one business

110
Q

What are the types of internal EOS?

A
  1. risk bearing
  2. financial
  3. marketing
  4. technical
  5. managerial
  6. purchasing

BUSINESS STUDIES (COMPONENT 1) (7 decks)

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