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Business 2 > Operations Management (Sec 4) > Flashcards

Operations Management (Sec 4) Flashcards

1
Q

What is productivity?

A

Productivity= (Quantity of Output) / (Quantity of Input)

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2
Q

What is labour productivity?

A

Labour productivity =

Output (over a period of time)) / (No. of employees

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3
Q

How can a business increase productivity?

A
  • Motivate/train workers
  • Improved quality & inventory control
  • New technology, Automation
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4
Q

What are the befits of increased productivity?

A
  • Increased output
  • Less cost per unit
  • Less workers needed
  • Higher wages boosts motivation
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5
Q

What is the buffer inventory level?

A

It is the inventory held to deal with uncertainty in consumer demand and deliveries of supplies

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6
Q

What is lean production?

A

Lean production refers to methods used by businesses to decrease waste, which increases efficiency

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7
Q

What are the seven type of waste?

A
  • Overproduction: Too many goods, costly storage
  • Waiting: When goods aren’t moving or being processed
  • Transportation: Damage can occur
  • Unnecessary inventory: Too much inventory is useless
  • Motion: Employees moving unnecessarily
  • Over-processing: Complex machinery doing simple tasks
  • Defects: Faulty products
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8
Q

Benefits of lean production?

A
  • Less storage costs, less waste
  • Faster production, some processes get cut out
  • Less injury
  • Machines used more productively
  • No need to repair faulty products
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9
Q

What are the types of Lean Production?

A
  • Kaizen
  • Just-in-time inventory control
  • Cell production
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10
Q

What is Kaizen?

A

Kaizen means continuous improvement through elimination of waste

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11
Q

What are the benefits of Kaizen?

A
  • Improved productivity
  • Less space needed for production
  • Work-in-progress is reduced
  • Improved factory layout may allow some jobs to be combined
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12
Q

What is just-in-time inventory control?

A

It is a production method in which reduces/eliminates the need to hold inventories of raw materials/unsold products. The supplies arrive at the time they are needed

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13
Q

What are the benefits of just-in-time inventory control?

A
  • No storage costs
  • No need for warehouses needed
  • Products are sold fast, so profits flow in quickly
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14
Q

What is cell production?

A

It is a production line divided into separate, self-contained units, each making a part of the product

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15
Q

What are three methods of production?

A
  • Job production: A single product is made at a time
  • Batch production: Products are made in batches
  • Flow production: Lots is produced continuously
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16
Q

Advantages/disadvantages of job production?

A

+Suitable for personal services, so higher prices charged
+Product meets exact requirements of consumers
+Workers have various jobs, so more motivation
-Skilled labour
-Higher costs, time-consuming
-Errors occur, Expensive materials

17
Q

Advantages/disadvantages of batch production?

A

+Flexible, lots of variation in product and workers’ jobs
+Damaged machines don’t affect work much
-Expensive, machines need to be reset after each batch
-Warehouse space needed

18
Q

Advantages/disadvantages of flow production?

A 
\+High output, sales & efficiency, low costs
\+Little training required
\+Can produce all day
-Boring, low motivation
-High storage costs
-High initial costs
19
Q

Advantages/disadvantages of using new technology?

A 
\+High productivity, output
\+More job satisfaction, better quality products
\+Quicker communication
\+More accurate data on consumer wants
-Higher unemployment
-Expensive
-Tech gets outdated quick
20
Q

What are fixed costs?

A

Costs which do not vary with the amount of sales in the short run. Also called overhead costs (e.g. rent, electricity)

21
Q

What are variable costs?

A

Costs which vary directly with the number of items sold or produced

22
Q

What are total costs & average cost per unit?

A
  • Total cost=Fixed costs+Variable costs

- Average cost=(Total costs of production) / (Total output)

23
Q

What is meant by “economies of scale”?

A

Economies of scale are factors that lead to a reduction of average costs as a business increases in size

24
Q

Name the five economies of scale

A
  • Purchasing economies: Discounts on bulk buying
  • Marketing economies: Easy to distribute, develop, market
  • Financial economies: Faster raising capital
  • Managerial economies: Can afford to hire specialists
  • Technical economies: Can use flow production, etc.
25
Q

What are dis-economies of scale?

A

Factors which lead to an increase in average costs as a business grows larger

26
Q

Name three dis-economies of scale

A
  • Poor communication
  • Slow decision-making
  • Low morale
27
Q

What is the break-even level of output?

A

It is the quantity of goods that must be sold for total revenue to be equal to total costs

28
Q

Advantages/disadvantages of break-even charts?

A

+Expected loss/profits can be seen
+Can be redrawn
+Shows safety margin
-They assume all goods are sold
-Don’t take into account other aspects of the business
-Often data will not be able to be plotted as straight lines

29
Q

How is break-even point calculated?

A

Break-even= Total fixed costs / Contribution(selling price-variable cost)

30
Q

Advantages of good quality products?

A

+Good brand image/reputation
+Increases sales
+Builds brand loyalty/attracts new customers

31
Q

What is quality control?

A

Checking for quality at the end of the production process is called quality control

32
Q

Advantages/disadvantages of quality control?

A 
\+Eliminates fault before product reaches customer
\+Less training required
-Expensive
-Doesn't find source of the problem
-Failed products wasted
33
Q

What is quality assurance?

A

Checking quality standards throughout the production process

34
Q

Advantages/disadvantages of quality assurance?

A

+Eliminates fault before consumer gets product\
+Less complaints, reduced costs
-Expensive training
-Dependant on employees

35
Q

How can a good quality product be ensured?

A
  • Quality control

- Quality assurance

36
Q

What is Total Quality Management?

A

TQM is the continuous improvement of products and processes by focusing on quality at each stage of production

37
Q

Advantages/disadvantages of TQM?

A

+Eliminates all faults
+No complaints
+Less waste
-Expensive, dependant on employees

38
Q

How can a consumer be assured of quality of a product/service?

A

The product should bear a quality mark. The company has to follow regulations to receive the mark, so quality is assured

39
Q

Which factors affect the decision of where to manufacture products?

A
  • Market
  • Power, water, rent, climate, raw materials, transportation
  • Labour availability
  • External economies of scale
  • Government influences

Business 2 (9 decks)

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