Operations chapter

Question 1

What are the benefits of Trinidad and Tobago as a location for businesses?

Answer 1

Close to major shipping routes, two major international ports, incentives from INVESTT, suitable climate, well-trained workforce, and membership in CARICOM.

Question 2

What are three key characteristics of location decisions?

Answer 2

Strategic in nature, difficult to reverse, and taken at the highest management levels.

Question 3

What are some potential drawbacks of non-optimal locations?

Answer 3

High fixed site costs, high labor costs, low unemployment rate, poor transport infrastructure.

Question 4

What are some quantitative factors that determine location decisions?

Answer 4

Site costs, labor costs, transport costs, potential revenue, government grants, external economies/diseconomies of scale.

Question 5

How can profit estimates assist in the location decision?

Answer 5

By comparing estimated revenues and costs of each location to identify the site with the highest potential annual profit.

Question 6

What factors influence the scale of operations of a business?

Answer 6

Owners’ objectives, capital available, size of the market, number of competitors, and scope for scale economies.

Question 7

What are internal economies of scale?

Answer 7

Cost benefits from increasing the scale of operations, such as purchasing, technical, financial, marketing, and managerial economies.

Question 8

What are purchasing economies of scale?

Answer 8

Suppliers offer discounts for large orders.

Question 9

What are technical economies of scale?

Answer 9

Large businesses can justify the cost of flow production lines and advanced technical equipment.

Question 10

What are financial economies of scale?

Answer 10

Large organizations have cost advantages when raising finance. Banks prefer lending to big businesses with proven track record and diversified range of products.

Question 11

What are marketing economies of scale?

Answer 11

Marketing costs do not rise at the same rate as the size of a business.

Question 12

What are managerial economies of scale?

Answer 12

Business expansion provides finance to be able to employ specialist functional managers who should operate more efficiently than general managers.

Question 13

What are internal diseconomies of scale?

Answer 13

Factors that increase unit costs as the scale of operations increases beyond a certain size, related to management problems.

Question 14

What are the main causes of internal diseconomies of scale?

Answer 14

Communication problems, alienation of the workforce, and poor coordination.

Question 15

How can businesses avoid internal diseconomies of scale?

Answer 15

Management by objectives, decentralization, and reducing diversification.

Question 16

What are external economies of scale?

Answer 16

Cost advantages resulting from a high concentration of businesses in the same industry and location.

Question 17

What are external diseconomies of scale?

Answer 17

Cost increases due to industry growth in one location, such as increased demand for land and labor.

Question 18

How do economies and diseconomies of scale affect unit costs?

Answer 18

Economies of scale decrease unit costs, while diseconomies of scale increase unit costs.

Question 19

What is the definition of quality?

Answer 19

Meeting customer expectations and being fit for purpose.

Question 20

How can consumer expectations be established by a business?

Answer 20

Using market research and analyzing results of consumer feedback data.

Question 21

What are the benefits of producing quality products?

Answer 21

Customer loyalty, reduced costs of complaints, prolonged product life cycles, reduced advertising costs, and higher prices.

Question 22

What is the difference between quality control and quality assurance?

Answer 22

Quality control is based on inspection, while quality assurance is based on setting agreed quality standards at all stages of production.

Question 23

What are the stages of effective quality control?

Answer 23

Prevention, Inspection, Correction and improvement.

Question 24

What are the problems with quality control based on inspection?

Answer 24

Inspectors believe that they have been successful when they find faults, not good for working relationships and the overall levels of morale in the firm and reduces workers’ responsibility for quality.

Question 25

What are the possible impacts of quality assurance on business?

Answer 25

Everyone is responsible for quality, Worker motivation is increased when employees are responsible for self-checking products and services, and being involved in efforts to improve quality, The system can be used to trace quality problems back to the stage of the production process where a problem is occurring, It reduces the need for the high costs of final inspection and reworking of faulty products, Quality standards are set for all stages of production. The quality of work at cach stage is assessed against these standards before the product is completed, Itreduces total quality costs and It can gain accreditation for quality assurance awards such as ISO 9000.

Question 26

What is total quality management (TQM)?

Answer 26

The involvement of all employees in a business. Everyone has a contribution to make to the overall quality of the finished product or service.

Question 27

What is benchmarking?

Answer 27

A comparison exercise between a particular business and the best in the industry, or between divisions within a company.

Question 28

What are the stages in the benchmarking process?

Answer 28

1 Identify performance indicators of the business to be benchmarked, 2 Measure performance in these areas, 3 Identify the businesses in the industry that are considered to be the best, 4 Use BPI data from the best businesses to establish the weaknesses in the business, 5 Set standards for improvement, 6 Change processes to achieve the standards set and 7 Re-measure.

Question 29

What are the importance of benchmarking in quality management?

Answer 29

1 Benchmarking is a more effective way of identifying and solving business problems than trying to solve production or quality problems without external comparisons, 2 The areas of greatest significance for customers are identified, and action is directed to improving these, 3 Itisa process that can help a business increase international competitiveness, 4 Comparisons between businesses in different industries, 5 It is important to involve the workforce, then their participation can lead to better ideas for improvement and increased motivation and 6 Internal benchmarking is comparing performances of different divisions of the same business. This form of benchmarking uses internal data which is easy to obtain.

Question 30

What are some limitations of the benchmarking approach?

Answer 30

Benchmarking depends on obtaining relevant and up-to-date information from other businesses in the industry,Merely copying the ideas and practices of other businesses may discourage initiative and original ideas, The costs of the comparison exercise may not be recovered by the improvements obtained from benchmarking.

Question 31

What are strategic operations decisions?

Answer 31

Expanding or reducing capacity, locating or relocating a business, offshoring or reshoring, outsourcing, changing operations methods, and applying IT/AI.

Question 32

How do human resources influence strategic operations decisions?

Answer 32

Availability of a skilled workforce, workforce planning, and employee training.

Question 33

How does marketing influence strategic operations decisions?

Answer 33

Long-term sales forecasts, distribution systems, and customer needs.

Question 34

How does finance influence strategic operations decisions?

Answer 34

Financial resources for expansion, relocation, or new technology investments.

Question 35

What are the benefits of using computer-aided design (CAD)?

Answer 35

Lower product development costs, increased productivity, improved product quality, quicker development of new products, good visualization, and great accuracy.

Question 36

What are the benefits of using computer-aided manufacturing (CAM)?

Answer 36

Precise manufacturing, faster production, more flexible operations, and integration with CAD.

Question 37

What are some applications of AI in business operations?

Answer 37

Customer call centers, banking loan processing, online payment fraud detection, legal case identification, manufacturing equipment maintenance, and pharmaceutical research.

Question 38

What is the importance of operational flexibility?

Answer 38

Improves business efficiency by adapting output, changing delivery schedules, and responding to unique customer specifications.

Question 39

How can operational flexibility be improved?

Answer 39

Increasing capacity, outsourcing production, holding high inventories, employing a flexible workforce, and investing in mass customization systems.

Question 40

What is process innovation?

Answer 40

Developing new ways of producing goods or delivering services.

Question 41

What are the main benefits of process innovation?

Answer 41

Lower-cost production methods and increased competitiveness.

Question 42

What is enterprise resource planning (ERP)?

Answer 42

Linking all business functions through one software platform.

Question 43

What are the efficiency improvements gained from using ERP software?

Answer 43

Supply according to demand, effective capacity utilization, JIT ordering, cost reductions, accurate costing, improved delivery, department coordination, and increased management information.

Question 44

What are the potential limitations of ERP?

Answer 44

Database and computer system costs, employee training costs, operational changes, and long implementation times.

Question 45

What is lean production?

Answer 45

Producing quality output with fewer resources, reducing waste, duplication, and non-value-added activities.

Question 46

What are the main sources of wasted resources in industry?

Answer 46

Excessive transportation, excessive inventory, unnecessary movement, waiting time, over-production, over-processing, defects, and underutilized talent.

Question 47

What are the key elements of lean production?

Answer 47

Kaizen, quality circles, simultaneous engineering, cell production, and JIT inventory control.

Question 48

What is kaizen?

Answer 48

The philosophy that all employees have something to contribute to improving business efficiency.

Question 49

What are quality circles?

Answer 49

Worker involvement in improving quality through small groups discussing quality issues.

Question 50

What is simultaneous engineering?

Answer 50

Performing design, market research, costing, and engineering tasks at the same time.

Question 51

What is cell production?

Answer 51

Splitting the production line into self-contained mini-production units.

Question 52

What are the main advantages of lean production?

Answer 52

Reduced waste, increased efficiency, lower costs, less crowded work area, reduced inventory risk, quicker product launches, improved quality, and enriched employee jobs.

Question 53

What are projects and why do operations decisions need to be planned carefully?

Answer 53

Specific tasks resulting from the need for change. To minimize resource use, including time.

Question 54

What is critical path analysis (CPA)?

Answer 54

A technique using network diagrams to indicate the shortest possible time to complete a project.

Question 55

What steps are involved in using CPA?

Answer 55

1. Identify objective. 2. Put tasks into sequence and draw network diagram. 3. Add durations. 4. Identify critical path. 5. Use network as control tool.

Question 56

What is total float and how is it calculated?

Answer 56

The amount of time an activity can be delayed without extending total project duration. Calculated as: LFT - duration - EST.

Question 57

What is free float and how is it calculated?

Answer 57

The amount of time an activity can be delayed without delaying subsequent activities. Calculated as: EST (next activity) - duration - EST (this activity).

Question 58

What are the benefits of critical path analysis (CPA)?

Answer 58

Accurate delivery dates, optimized material ordering, performance control, identification of critical path delays, resource allocation, efficiency, and management planning.