Operations Management-decision Making Flashcards
What are squares represented as in decision trees?
Decision points
What is a decision tree
They attempt to quantify the likely outcome of any decision taken using numbers to give a financial return and the probability of this occurrence
What do circles represent in decision trees?
probability outcomes
What are 3 other factors you need to consider?
Time scale of the options
Objectives of the business
Risk attitude of the decision makers
What are 3 advantages of using decision trees?
Can quantify risk (know what % it actually could happen)
Makes us consider other options
Consider if it’s even worth doing
What are 3 disadvantages of using decision trees?
Doesn’t give definitive answers- estimated risks
Doesn’t take into account company’s attitudes towards risk
Time lag
What is critical path analysis?
a tool used to plan activities
breaks down a job into a number of tasks and looks at the dependency of them
In a critical path, what does an arrow represent?
an activity-it requires time and/or resources
In a critical path, what does a circle represent?
a node-represents start/end of an activity
In a critical path, in a node, what does the left hand number represent?
The order of the activities
In a critical path, in a node, what does the top right hand number represent?
Earliest start time
In a critical path, how do you work out earliest start time?
earliest start time of one before+number under arrow
In a critical path, what does the number in the node on the bottom right represent?
latest finishing time
In a critical path, how do you work out latest finishing time?
latest finishing time of following activity-duration of that activity
What is spare time also know as in a cpa?
float
what are the 2 types of float in cpa?
free float and total float
what is free float in cpa?
the individual activities with spare time
what is total float in cpa?
whole spare time added together
what are 3 advantages of cpa?
helps you decide and know which things are critical
helps you control cash flow-what you dont need to happen
helps with time management
what are 3 disadvantages of cpa?
based on last years figures-estimates
exogenous shocks could occur-contingency planning
more complicated=less beneficial, waste of time?
what are 3 examples of waste?
idle staff
waste of materials
damaged stock
what are 3 methods of waste management?
just in time
kaizen
total quality management
what is just in time?
a way of manufacturing and production where materials are delivered immediately before they are required in order to minimise storage costs
what is kaizen?
continuous improvement
what is total quality management?
system of management based on the principle that every member of staff must be committed to maintaining high standards of work in every aspect of a company’s operations.
what are 3 costs of waste management?
financial costs
time issues- take time out of work/production
extra resources- time and effort
what is specialisation?
where a nation identifies industries in which is has an absolute or comparative advantage over rival nations and they concentrate on growing these industries so they can produce more of that.
what is absolute advantage?
being able to produce a product using less given resources than another
what is comparative advantage?
being able to produce a product at a lower opportunity cost
what is backward innovation?
selling products that are further back to developing markets e.g selling iPhone 3 to India now
what is a saturated market?
cannot sell anymore products because everyone who wants one has one
what are 3 advantages to a business trading with comparative advantage?
building factories abroad means paying lower wages
call centers in India - outsourcing
buying from supliers
what are 5 ways in which you can make a business more competitive?
improve efficiency lower prices growth-economies of scale off-shore and out source advertising
