operations

Question 1

fixed costs

Answer 1

these are the costs that will always stay the same no matter what

Question 2

variable costs

Answer 2

these are costs which change depending on how many units of a product are made.

examples are raw materials, electricity, cost of labour etc

Question 3

total costs

Answer 3

these are fixed costs and variable costs added together

Question 4

revenue

Answer 4

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

Question 5

what are the main 3 stages in operations?

Answer 5

input (stage 1)
process (stage 2)
output (stage 3)

Question 6

what is stage one of the system of operations?

Answer 6

raw materials are purchased and labour is employed

Question 7

what is stage 2 in the system of operations?

Answer 7

the production process in commences

Question 8

what is stage 3 of the system if operations?

Answer 8

the finished product is ready for consumers to purchase

Question 9

what is the role of the operations department?

Answer 9

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

Question 10

what is purchasing of raw materials?

Answer 10

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.

Question 11

what does the quality of stock to be ordered depend on?

Answer 11

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

Question 12

what is the quality mix? (quality)

Answer 12

Consideration should be given to the quality of the raw materials on offer from each supplier. Is the quality of a satisfactory standard?

Question 13

what is the quality mix? (time)

Answer 13

Potential suppliers of raw materials should be able to deliver by the date requested by the Operations Department.

Question 14

what is the quality mix? (quantity)

Answer 14

Any potential supplier of raw materials must be able to meet the quantities required by the Operations Department.

Question 15

what is the quality mix? (dependability)

Answer 15

Potential suppliers must be dependable, respectable, likely to stay in business and have reliable delivery systems in place.

Question 16

what is the quality mix? (price)

Answer 16

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

Question 17

what is the quality mix? (location)

Answer 17

if the supplier is not close by there could be expensive delivery charges

Question 18

what is capital intensive production?

Answer 18

The Operations department must decide on whether investment in machinery, rather than humans, is the best investment for the business in the long run.

Question 19

what is labour intensive production?

Answer 19

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.

Question 20

what is a disadvantage of labour intensive production?

Answer 20

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

Question 21

what is automated production?

Answer 21

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.

Question 22

what is mechanised production?

Answer 22

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.

Question 23

what is good about capital intensive labour?

Answer 23

breakdowns can cost a lot

expensive to set up

employees might become demotivated

difficult to customise

Question 24

why might a company choose one method of production over the other?

Answer 24

Finance available

quantity

Question 25

what is finance available? (method of production)

Answer 25

• 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

Question 26

what is quantity (method of production)?

Answer 26

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

Question 27

what is technology (method of production)?

Answer 27

if the required technology to produce the goods is unavailable than the company would have no choice but to use labour intensive

Question 28

what are some ways you can ensure quality?

Answer 28

high quality raw materials
quality assurance
quality control
quality management