operations Flashcards
fixed costs
these are the costs that will always stay the same no matter what
variable costs
these are costs which change depending on how many units of a product are made.
examples are raw materials, electricity, cost of labour etc
total costs
these are fixed costs and variable costs added together
revenue
this is the name given to money that a business receives through selling a product. the more products sold, the higher the total revenue.
it is different from profit since no costs have been taken off yet
total revenue = selling price x units sold
what are the main 3 stages in operations?
input (stage 1)
process (stage 2)
output (stage 3)
what is stage one of the system of operations?
raw materials are purchased and labour is employed
what is stage 2 in the system of operations?
the production process in commences
what is stage 3 of the system if operations?
the finished product is ready for consumers to purchase
what is the role of the operations department?
purchasing of raw materials
quality control ensuring final products are of a high standard
managing the control of stocls
organising efficient methods of production
storage and final distribution of the final product
what is purchasing of raw materials?
The first task for the Operations Department is to purchase the raw materials required for the production of the business’ product/s or service/s. The Operations Department must buy the correct quantities of raw materials (and other resources), at the correct time and from the most suitable and reliable supplier.
Raw materials must be in place or production simply will not happen. This could result in a loss of customers and so a reduction in profits.
what does the quality of stock to be ordered depend on?
current stock of raw materials available
amount of the finance available to store raw materials for example, the size of warehouse
storage space available to store raw materials, for example, the size of the warehouse
delivery/lead time – time between placing the order and the goods being delivered to the warehouse
daily usage – the amount of raw materials used each day in the production process
potential demand from customers for the businesses products
what is the quality mix? (quality)
Consideration should be given to the quality of the raw materials on offer from each supplier. Is the quality of a satisfactory standard?
what is the quality mix? (time)
Potential suppliers of raw materials should be able to deliver by the date requested by the Operations Department.
what is the quality mix? (quantity)
Any potential supplier of raw materials must be able to meet the quantities required by the Operations Department.
what is the quality mix? (dependability)
Potential suppliers must be dependable, respectable, likely to stay in business and have reliable delivery systems in place.
what is the quality mix? (price)
The lowest price for the quality desired should be sought to ensure value for money. Discounts should be requested for good custom and bulk buying
what is the quality mix? (location)
if the supplier is not close by there could be expensive delivery charges
what is capital intensive production?
The Operations department must decide on whether investment in machinery, rather than humans, is the best investment for the business in the long run.
what is labour intensive production?
some companies use humans rather than machinery to produce goods – particularly where a single product or a few of the same types of product are being produced, for example, designer dresses. This is known as the labour intensive system.
what is a disadvantage of labour intensive production?
quality of products may vary
skilled workers take a while to train
skilled workers need to be paid more
workers require days off which may stop production
what is automated production?
Automated productions is when the production process is mainly carried out by machinery/robots and is mostly controlled by computers. Human input is limited in automated production.
what is mechanised production?
Mechanised production is when the production process requires both machinery and humans. Machines are required to carry out most of the work although they are operated and controlled by humans.
what is good about capital intensive labour?
breakdowns can cost a lot
expensive to set up
employees might become demotivated
difficult to customise
why might a company choose one method of production over the other?
Finance available
quantity
what is finance available? (method of production)
- a large amount of capital is required to invest in capital intensive production. Some businesses may not be able to afford to invest in this method of production
what is quantity (method of production)?
if large quantities of identical goods are required then a company will be more likely to use capital intensive methods of production. Whereas if the product being supplied is a low quantity of a tailored product then labour intensive methods would be preferred
what is technology (method of production)?
if the required technology to produce the goods is unavailable than the company would have no choice but to use labour intensive
what are some ways you can ensure quality?
high quality raw materials
quality assurance
quality control
quality management
