OPERATIONS BUSINESS Flashcards
What is the maximum stock level?
The most amount of stock that can be held at any one time.
Helps to avoid consequences of overstocking.
What is the minimum stock level?
The least amount of stock that can be held to ensure production can continue.
Helps to avoid consequences of undestocking.
What is lead time?
The time it takes between ordering from a supplier to the goods being delivered.
A shorter lead time could help the business react to an increase in demand.
What is buffer inventory?
Extra inventory to be used in emergencies.
Ensures that production doesn’t stop.
What is the re-order level?
The point where inventory is re-ordered.
Helps to avoid running out of stock.
What are reorder quantities?
The amount of stock that is ordered.
Ensures the business doesn’t order too much or too little.
What factors affect maximum stock levels?
- Storage space available
- Cost of storage
- Maximum amount of demand
What factors affect minimum stock levels?
- Skill levels of staff
- Finance available
- Minimum amount of demand
- Likelihood of changes in tastes and fashions
- Relationships with suppliers
What influences reorder levels?
- Lead time
- Amount of stock already held
- Availability of bulk-buying discounts
- Maximum and minimum stock levels
How does price influence supplier choice?
Higher prices may encourage the business to choose a cheaper supplier.
How does location impact supplier choice?
Suppliers farther away may take longer to deliver and incur higher delivery costs.
How does lead time influence supplier choice?
A shorter lead time is preferred to meet tight customer deadlines.
What is the importance of product quality in supplier selection?
High-quality products increase customer satisfaction and reduce waste.
What role does reliability play in choosing a supplier?
Reliable suppliers avoid production delays and empty shelves.
What is supplier reputation?
How well known a supplier is for delivering quality products on time.
What are the consequences of understocking?
- Running out of raw materials
- Production stops
- Increased delivery costs
What are the consequences of overstocking?
- Supplies may go out of date
- Increased theft risk
- Tied-up capital in stock
What is just-in-time inventory?
A strategy that reduces inventory costs by ordering stock only as needed.
What are the advantages of just-in-time inventory?
- Saves on warehousing costs
- Reduces likelihood of stock going out of date
- Minimizes wastage
What are the disadvantages of just-in-time inventory?
- Over-dependence on suppliers
- Vulnerability to supply chain disruptions
What is centralized storage?
Storing inventory in one central location in a large purpose-built warehouse.
What are the advantages of centralized storage?
- Improved speed of stock handling
- Economies of scale from bulk buying
What are the disadvantages of centralized storage?
- High costs for specialized staff and equipment
- Unresponsiveness to local needs
What is decentralized storage?
Storing inventory in locations close to where they are needed for production or sales.
What are the advantages of decentralized storage?
- Lower costs due to less specialized staff
- Inventory always close at hand
What are the disadvantages of decentralized storage?
- Reduced speed of stock handling
- Less consistency in procedures
What are the advantages of computerized inventory control?
- Automatic updates
- Accurate reordering
- Insights into sales trends
What are the disadvantages of computerized inventory control?
- High installation costs
- Need for staff training
What is capital-intensive production?
Producing products primarily by means of machinery and equipment.
What are the advantages of capital-intensive production?
- Consistency in production
- Reduced human error
What are the disadvantages of capital-intensive production?
- Huge investment required
- Vulnerability to breakdowns
What is mechanization?
A method of production where labor and machines work together.
What are the advantages of mechanization?
- Improved accuracy
- Increased speed of production
What are the disadvantages of mechanization?
- Dependent on human operation
- Production downtime due to machine repairs
What is labor-intensive production?
A method of production primarily involving human labor.
What are the advantages of labor-intensive production?
- Creativity and initiative from workers
- Lower initial costs than automation
What are the disadvantages of labor-intensive production?
- Limited production time due to breaks
- Higher overtime costs
What factors influence the choice of production method?
- Quantity of goods required
- Skills of the workforce
- Cost of labor
- Finance available
- Technology available
What is quality control?
Inspection method where quality is checked at the beginning and end of production.
What are the advantages of quality control?
- Ensures faulty products are not sent to customers
- Maintains high customer satisfaction
What are the disadvantages of quality control?
- Can create high levels of waste
- Time-consuming at the end of production
What is quality assurance?
A method where quality is checked at every stage of the production process.
What are the advantages of quality assurance?
- Reduces waste by catching mistakes early
- Identifies areas for improvement
What are the disadvantages of quality assurance?
- Can slow down production
- Increases labor costs
What is benchmarking?
Copying the quality of a competitor’s product and manufacturing processes.
What are the advantages of benchmarking?
- High-quality product
- Saves time and money on quality development
What are the disadvantages of benchmarking?
- Difficulty in obtaining necessary information
- Business may not become a market leader
What is a quality circle?
Small groups of workers meeting to discuss quality improvement.
What are the advantages of a quality circle?
- Generates ideas from employees
- Motivates employees through teamwork
What are the disadvantages of a quality circle?
- Time-consuming
- May require training for participants
What is mystery shopping?
An external individual evaluates the service as a customer would.
What are the advantages of mystery shopping?
- Provides unbiased feedback
- Can suggest improvements
What are the disadvantages of mystery shopping?
- Increased costs
- Results may not be representative
What is ethical operations?
Organizations show moral consideration for others in decision-making.
What are the advantages of ethical operations?
- Attracts customers and quality staff
- Can gain promotional awards
What are the disadvantages of ethical operations?
- Time-consuming audits
- Complex decision-making
What is environmental responsibility?
Organizations help the environment through sustainable practices.
What are the advantages of environmental responsibility?
- Positive impact on the environment
- Can gain promotional awards
What are the disadvantages of environmental responsibility?
- Short-term investment costs
- Time-consuming adaptations
What is fair trade?
A trading partnership that aims for equitable trade conditions.
Promotes sustainability and fairness for producers.
What is a potential drawback of investing in environmentally friendly measures?
It can be expensive in the short term
Initial costs may deter organizations from adopting sustainable practices.
How can awards for being environmentally friendly be utilized?
They can be used for promotional purposes
Awards can enhance an organization’s public image.
What may need to be adapted to become more environmentally friendly?
New procedures
Transitioning to sustainable practices often requires time and adjustment.
What is a long-term financial benefit of renewable energies?
They save costs as fuels like oil, petrol, or gas don’t need to be paid for
Sustainability can lead to significant savings over time.
What is a limitation of environmentally friendly procedures?
They rely on the natural environment, which may not be sufficient
Examples include lack of wind for turbines or insufficient sunlight for solar panels.
How can having a positive effect on the environment benefit an organization?
It can ensure the organization gains a positive reputation
Public perception can significantly impact business success.
What role does technology play in operations?
It facilitates quick purchasing and inventory management
Technology streamlines various operational processes.
What technology can be used to purchase supplies quickly?
IT devices like laptops, tablets, smartphones, and email
These tools enhance communication and efficiency in procurement.
What can the internet be used for in supply chain management?
To research supplier prices
Online resources provide competitive pricing information.
What is EPOS used for?
Computerized inventory control to automatically re-order depleted inventory
This system helps maintain stock levels efficiently.
How can warehouse staff utilize computerized devices?
To check and find inventory
Technology aids in accurate inventory management.
What can automated systems track?
Deliveries for both the business and customer information
Automation improves logistics and customer service.
What can spreadsheets be used for in operations?
To accurately and quickly produce data
They are essential for data management and analysis.
What does CAM stand for?
Computer Aided Manufacture
It refers to the use of computer systems to control machinery in the manufacturing process.
What are examples of emerging technologies used for harnessing renewable energy?
Solar energy, wind energy, and electric vehicles (EV)
These technologies represent advancements in sustainable energy solutions.
