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Business Paper 1 > Operations management > Flashcards

Operations management Flashcards

1
Q

What is operations management ?

A

Methods used by business to create products & services that are efficiently delivered to customer to maximise profits & reduce costs

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2
Q

What is added value ?

A

Enhancing gap between production cost & selling price, which customers view as better over competitors

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3
Q

What is the equation for added value ?

A

Selling price - cost of production

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4
Q

What are 4 ways to add value ?

A
  1. Build a brand
  2. Add features
  3. Offer convenience
  4. Good customer service
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5
Q

What are 2 advantages of added value ?

A
  1. Charge premium price
  2. Gives USP
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6
Q

What are 2 disadvantages of added value ?

A
  1. High prices create high expectations business may not be able to achieve
  2. Costly for investment & time consuming
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7
Q

What is production ?

A

Total amount of output produced in specific time period

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8
Q

What are 3 methods of production ?

A
  1. Job production
  2. Batch production
  3. Flow production
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9
Q

What is job production ?

A

Producing one off items to meet needs of an individual customer

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10
Q

What are 2 advantages of job production ?

A
  1. Specialist service
  2. Meets specific customer needs
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11
Q

What is a disadvantage of job production ?

A

Time consuming & costly

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12
Q

What is batch production ?

A

Identical items produced in groups, each item passing through production process at same time

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13
Q

What are 3 advantages of batch production ?

A
  1. Variation can be achieved in between batches
  2. Cheaper & quicker
  3. Specialist needs can still be met
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14
Q

What are 2 disadvantages of batch production ?

A
  1. Lower productivity = time lost switching between batches
  2. Uniform products
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15
Q

What is flow production ?

A

Items flow along production line in a continuous process & uses automation

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16
Q

What are 6 advantages of flow production ?

A
  1. Efficient process = specialisation of workers
  2. Division of labour
  3. Machinery
  4. Low cost per unit
  5. Consistent quality
  6. Continual output = less need to hold stock
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17
Q

What are disadvantages of flow production ?

A
  1. High initial costs
  2. Mistakes can shut down whole process
  3. Repetitive work
  4. Standardised products only
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18
Q

What is productivity ?

A

Output per input of a person or machine per hour

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19
Q

What are 4 ways of improving productivity ?

A
  1. Training employees
  2. Improving motivation
  3. Buying more or better capital equipment
  4. Buying better quality raw materials
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20
Q

What is capacity utilisation ?

A

Measures proportion of current output compared with maximum possible output in given time period

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21
Q

What is the equation for capacity utilisation ?

A

Actual output / maximum possible output x100

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22
Q

What are 3 ways of improving capacity utilisation ?

A
  1. Increasing workforce hours
  2. Improving marketing
  3. Cutting capacity of factory
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23
Q

What are 2 advantages of using capacity utilisation as a measure ?

A
  1. Indicates efficiency in producing its products
  2. As utilisation increases = average costs of producing each product falls
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24
Q

What are 2 disadvantages of using capacity utilisation as a measure ?

A
  1. Higher utilisation = difficult in producing product with consistent quality
  2. Higher utilisation = higher pressure on workforce
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25
What is technology ?
Use of machinery, devices & scientific knowledge to create & sell product or service
26
What is internal information technology ?
1. Interdepartmental 2. Order processing 3. Quality data
27
What is interdepartmental IT ?
Managing supplier relationships
28
What is order processing IT ?
Hand held devices
29
What is quality data IT ?
Telling production workers about number of defects
30
What is external information technology ?
1. Working with suppliers 2. Sourcing supplies 3. Tracking of supply chain
31
What is working with suppliers IT ?
1. Using EDI (electronic data interchange) to process orders 2. Automatic recording stock control
32
What is sourcing supplies IT ?
Internet = finds new suppliers
33
What is tracking of supply chain IT ?
Informs customers of order progress
34
What is an advantage of IT ?
Produces cost savings, better quality products & lower unit costs
35
What is a disadvantage of IT ?
Costly = significant investment required to gain competitive advantage
36
What is automation ?
Using machines to control a process & aids stock control, examples are EPOS & CAM
37
What is robotics ?
Programming robots to carry out tasks more traditionally completed by humans
38
What are 3 advantages of robotics ?
1. Accurate & consistent 2. Quick & resilient 3. Can be done in hazardous environments
39
What are 3 disadvantages of robotics ?
1. High initial & maintenance costs 2. Loss of human touch 3. Lack of initiative
40
What is computer aided manufacture (CAM) ?
Technology that uses software to run machinery to create products on production line
41
What is an advantage of CAM ?
Quick, highly accurate & consistent
42
What is a disadvantage of CAM ?
High set up & unit costs for low volume production
43
What is computer aided design (CAD) ?
Producing accurate designs & drawings of products in 2D or 3D using computer programs
44
What are 2 advantages of CAD ?
1. Can draw a product to scale 2. Can amend & manipulate design to fit customer needs
45
What are 2 disadvantages of CAD ?
1. Expensive to purchase 2. Require highly skilled staff to operate them
46
What is lean production ?
Aims to cut waste & minimise costs whilst maintaining or improving quality = reducing waste is key to increasing productivity through lean production
47
What are 4 methods of lean production ?
1. Kaizen 2. Just in time 3. Cell production 4. Time based management
48
What is Kaizen in 6 statements ?
1. Small but frequent improvements in every aspect of production process 2. All members of workforce involved 3. Employees encouraged to work in Kaizen groups 4. Improvements can take place at any level of hierarchy 5. Requires highly motivated & committed team 6. Vital component of Total Quality Management
49
What is an advantage of Kaizen ?
Increased productivity as reduced waste
50
What are 2 disadvantages of Kaizen ?
1. Staff may wish not to be involved in process 2. High set up costs
51
What is cell production in 3 statements ?
1. Form of flow production = split into self contained cells 2. Each cell takes responsibility for production of complete units of output 3. Members work as team to achieve goals
52
What is an advantage of cell production ?
Increases quality, team work & motivation
53
What is a disadvantage of cell production ?
Staff must be well trained
54
What is time based management in 3 statements ?
1. Recognises importance & cost of time 2. Reduces time waste 3. Requires flexibility
55
What are 2 advantages of time based management ?
1. Reduces lead times 2. Quicker response to customer needs
56
What is a disadvantage of time based management ?
May not benefit from EOS
57
What are 2 advantages of lean production ?
1. Decrease waste = saving costs 2. Workers encouraged to work in teams & look for improvements
58
What are disadvantages of lean production ?
1. Potentially struggling to meet orders if suppliers cant deliver on time 2. No benefits from EOS = no bulk buying
59
What is quality ?
Features of a product or service that allow it to satisfy customer needs
60
What are 4 ways of controlling quality ?
1. Quality control 2. Quality assurance 3. Total quality management 4. Benchmarking
61
What is quality control ?
Inspecting products at the end of the production process
62
What are 3 advantages of quality control ?
1. Quality monitored 2. Stops faulty products reaching customer 3. Common problems identified
63
What are 3 disadvantages of quality control ?
1. Requires additional personnel 2. Problems identified at end of process 3. High waste levels
64
What is quality assurance ?
Inspecting products at every step of the production process
65
What are 3 advantages of quality assurance ?
1. Stops any faults before reaching next stage of process 2. Motivates workers who are responsible for ensuring quality standards are met 3. Aim to achieve objective of zero defects
66
What are 3 disadvantages of quality assurance ?
1. Requires staff training & high levels of commitment 2. Can slow down production proces 3. Put workers under pressure
67
What is total quality management in 2 statements ?
1. Sees quality as responsibility of all employees 2. Each employee is a link in chain & treats next link like customer
68
What are methods of achieving TQM ?
1. Quality chains 2. Empowerment 3. Monitoring 4. Team work 5. Zero defects 6. Quality circles 7. Benchmarking
69
What is a quality circle ?
Groups of employees who meet regularly to identify potential improvements in quality
70
What is benchmarking ?
Looks at comparable organisations, usually with better performance in certain areas, to see what lessons can be learned to improve their own performance
71
What is purchasing ?
Acquisition of raw materials or products by a business
72
What is stock ?
Value of products kept on business premises at any one time
73
What is stock control ?
How businesses try to ensure that stock levels are managed efficiently
74
What are 3 methods of stock control ?
1. Just in case 2. Just in time 3. Computerised stock control
75
What is just in case ?
Keeping certain amount of stock in reserve to allow for unexpected problems
76
What are 3 advantages of just in case ?
1. Can respond to delays in deliveries 2. Can meet demand 3. Not reliant on suppliers
77
What are 2 disadvantages of just in case ?
1. Higher waste 2. Higher costs for rent
78
What is just in time ?
Ordering stock as and when is needed
79
What are 2 advantages of just in time ?
1. Lower costs for rent 2. Avoid unsold or obsolete stock
80
What are 3 disadvantages of just in time ?
1. May not be able to meet demand 2. Heavily reliant on suppliers 3. Cant respond to delays in deliveries
81
What is computerised stock control ?
Checking stock using computer system which will reorder stock when its required
82
What is a stock control diagram ?
Measures level of stock over time
83
What is lead time ?
Total time taken to manufacture &/or deliver a product
84
What are 3 disadvantages if holding too much stock ?
1. Costs for storage 2. Money tied up in stocks 3. Large stocks = deteriorate & theft
85
What are 2 disadvantages of holding too little stock ?
1. Cant meet unexpected demand 2. Cant take advantage of EOS = buying in bulk
86
What is research & development ?
The investigation, invention & development of products including testing, feedback & launch
87
What is innovation ?
Process of translating an idea or invention into a good or service that creates value for which customers will pay
88
What are 3 advantages of R&D ?
1. Improved products with higher added value 2. Competitive advantage 3. Premium pricing = to operate increasing profit margins
89
What are 2 disadvantages of R&D ?
1. High upfront costs before any return 2. Products may be developed that customers don't want/obsolete
90
What are economies of scale ?
Savings a business can make by increasing its level of production which can reduce average costs
91
What are 2 types of EOS ?
1. Internal 2. External
92
What is internal EOS ?
Relates to the growth of an individual business
93
What are methods of internal EOS ?
1. Technical EOS 2. Specialisation 3. Purchasing EOS 4. Managerial EOS
94
What is technical EOS ?
Larger the business, more it can afford to invest in specialist machinery & automation
95
What is specialisation ?
Larger the workforce, more production can be split into different activities in order to raise productivity
96
What is purchasing EOS ?
Larger the business, more power it has to bulk order materials & products at discounted prices
97
What is managerial EOS ?
Specialists employed by large manufacturer to supervise production, marketing & human resources
98
What is external EOS ?
Result of whole industry growing in size
99
What are methods of external EOS ?
1. Research & development 2. Relocation of suppliers of parts 3. Investment in industry-related infrastructure
100
What is diseconomies of scale ?
Managerial inefficiencies put upwards pressure on costs per unit
101
What are 3 reasons diseconomies of scale can happen ?
1. Poor internal communication 2. Poor employee motivation 3. Overtrading
102
What are 4 advantages of surviving as a small business ?
1. Product differentiation & USP 2. Providing excellent customer service 3. Flexibility in responding to customer needs 4. E-commerce
103
What are 3 advantages of EOS ?
1. Larger business become = more bulk buying benefits 2. Lower unit costs = greater the potential profit margin 3. Shareholders benefit from greater profitability, higher share price related to growth & increase in dividend payments
104
What are 3 disadvantages of EOS ?
1. Larger business = higher risk of suffering from DEOS 2. Larger business dominate market = scrutiny from competition authorities 3. Business can often lose sight of customer needs & want = dissatisfaction

Business Paper 1 (11 decks)

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