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cambridge igcse business studies > operations management > Flashcards

operations management Flashcards

1
Q

production def`

A

the process of converting inputs such as land, labour, and capital into saleable goods

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2
Q

primary sector def

A

firms whose business activity involves the extraction of natural resources.

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3
Q

secondary sector def

A

firms that process and manufacture goods from natural resources

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4
Q

tertiary sector def

A

firms that supply a service to consumers and other businesses

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5
Q

what is operations management

A

mangaging business resources throughout the production process so as to produce finished goods

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6
Q

productivity def

A

a measure of the efficency of inputs used in the production process, especially labour and capital.

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7
Q

labour productivity =

A

total output / number of production workers

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8
Q

what must operations management do

A

use resources in the most cost-effective way
produce the required output to meet consumer demand
meet the quality standard expected by consumers

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9
Q

how do you increase productivity of workers

A

improving the skill level of workers
improving the motivation of workers
introducing more automation/technology
improving quality of managment decisions

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10
Q

inventories def

A

the stock of raw materials, work -in-progress and finished goods held by a business

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11
Q

what do businesses hold stock of

A

raw materials and components
work in progress
finished goods

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12
Q

how does holding inventories add to a businesses costs

A 
warehousing costs 
handling costs 
shrinkage costs
insurance costs
obsolescence
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13
Q

what is obsolescence

A

the business may not be able to sell out of date goods.

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14
Q

why do businesses hold inventories

A
  1. the production process needs raw materials or components. if these are not available when they’re needed production will stop and ouput will decrease
  2. if the business does not have finished goods in stock, then orders cannot be met and the business will lose sales. this could result in the loss of current and future sales.
  3. purchasing economies (bulk buying)
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15
Q

lean production def

A

the production of goods and services with the minimum waste of resources.

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16
Q

examples of lean production

A

Just in time inventory control

Kaizen

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17
Q

benfits of lean production

A

new products can be brought to the market more quickly
quality is improved
wastage of time and other resources is reduced or eliminated
the costs of holding inventories is eliminated
unit costs are reduced

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18
Q

what is Just in time inventory control

A

raw materials and components arrive from suppliers just as they are needed by the production process. as soon as finished goods leave the production process, they are delivered to the customer.

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19
Q

what is Kaizen

A

the approach gives all workers the opportunity to make suggestions about how to improve quality or productivity.

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20
Q

job production

A

the production of items one at a time

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21
Q

batch production

A

the production of goods in batches. each batch passes through one stage of production before then moving onto the next stage.

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22
Q

flow production

A

the production of very large quantities of identical goods using a continuously moving process.

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23
Q

capital intensive def

A

production process uses a high quantity of capital equipment compared with labour input.

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24
Q

what is CAD

A

computer aided design

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25
Q

what is CAM

A

computer aided manufacturing

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26
Q

fixed costs

A

costs that do not change with output

27
Q

variable costs

A

costs that change in direct proportion to output

28
Q

total cost

A

all the variable and fixed costs of producing the total output

29
Q

total costs =

A

fixed costs + total variable costs

30
Q

average costs

A

the cost of producing a single unit of output

31
Q

example of fixed costs

A

rent, salaries, telephone bill - contract

32
Q

example of variable costs

A

electricity, transport, wages - part time workers

33
Q

average costs =

A

total cost / quantity produced

34
Q

economies of scale

A

the reduction in average costs as a result of increasing the scale of operations

35
Q

marketing economies

A

these economies exist because certain costs such as producing an advert can be spread over more units of output for a larger firm

36
Q

purchasing economies

A

big multinational firms can get cheaper rates from suppliers as they buy in bulk at discounted prices

37
Q

risk bearing economies

A

wider product ranges and more markets help to reduce the business risk; larher firms can invest in research an development projects

38
Q

managerial economies

A

specialists such as accoutants can be employed to improve efficency through specialisation

39
Q

financial economies

A

larger companies have easier access when raising money, banks are happy to lend at low interest rates because of the huge sums involved.

40
Q

technical economies

A

larger factories invest more into machinery; this improved efficency and enables specialisation

41
Q

diseconomies of scale

A

factors that cause average costs to rise as the scale of operations increases

42
Q

problems for a business that has become too large

A

poor communication
demotivation of workers
poor control

43
Q

reasons for breakeven charts

A

helps business decide how much to sell in order to make profit
helps business decide what the selling price should be
helps business gain loans from banks

44
Q

limitations of break even charts

A

difficult to predict number of customers who will buy the firms products
changes in economy could cause demand for products/services to decrease
new competitors entering the market can lead to firms reducing the selling price to maintain market share.

45
Q

break-even def

A

the level of output where revenue equals total costs, the business is making neither profit nor loss.

46
Q

what is margin of safety

A

the difference between actual output and breakeven level of output

47
Q

start up capital def

A

the capital needed by an entrepreneur when first starting a business

48
Q

working capital def

A

the capital needed to finance the day to day running of the business

49
Q

non-current fixed assets def

A

resources owned by a business which will be used for a period longer than a year, for example buildings or machinery

50
Q

capital expenditure def

A

spending by a business on non-current assets such as machinery or buildings

51
Q

long term fianance def

A

debt or equity used to finance the purchase of non-current assets or finance expansion plans. long-term debt is borrowing a business does not expect to repay in less than five years

52
Q

short term finance def

A

loans or debt that a business expects to pay back within one year

53
Q

quality def

A

ensuring a good or service that meets the needs and requirements of its consumer

54
Q

quality standards def

A

the minimum acceptable standard of production or service acceptable to consumers

55
Q

why is quality important

A 
brand image
keep customers and attact new ones
reduce customer complaints and returns
charge a premium price
encourage wholesalers and retailers to stock the product
lengthen product life cycles
56
Q

quality control def

A

checking the quality of goods through inspection

57
Q

quality assurance def

A

a sysem of setting agreed standards for every stage of production

58
Q

infrastructure def

A

the basic facilities, services and installations needed for a business to function, e.g. water, power, transport links

59
Q

quantative factors examples

A 
cost of site
availability and cost of labour
transport costs
market potential
issues
60
Q

qualitative factors examples

A

site
legal controls
infrastructure
ethical concerns

61
Q

government incentives def

A

usually finance such as interest-free loans, or grants provided to a business to help when locating in a country or area of a country

62
Q

why would businesses locate their operations to anothr country

/continent

A

growth
reduce production costs
locate production closer to market

lower labour costs
access to global makrets
avoid legal barriers and tarriffs
gov incentives

63
Q

problems of locating operations in another continent

A

cultural differences
communication problems
ethical concerns
quality issues

cambridge igcse business studies (6 decks)

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