operations management test Flashcards
Operations Management :
refers to the business function of combining inputs to produce outputs (goods and services) that are valued by consumers
Inputs:
Available resources of the organization such as land, labor, capital, enterprise
Processing:
adding value
outputs:
The outputs of products (goods and services)
lean production;
the process of streamlining operations and processes to reduce all forms of waste and to achieve greater efficiency. Leads to improved quality and reduced costs
CSR
corporate social responsibility refers to the corporation’s obligations to society at large as well as the environment. It is important as companies prioritizing csr are proactive in seeking ways to improve society through their business activities.
triple bottom line:
Is the combination of economic sustainability, social sustainability and ecological sustainability.
feedback loops (including downstream):
is the process in which the outputs of a system are circled back and used as inputs refers to the process of using customer or employee feedback to create better products/workplace.
Job production:
is the production of a special or customized good or service suited to the specific requirements of an individual customer. (one-off unique good or service) labor intensive and expensive.
Batch Production:
is a production method that involves identical goods being made in groups (batches) rather than a continuous flow.
lead time:
Refers to the length of time it takes between a firm ordering new stock and the firm ordering new stock and the firm receiving the stock for production.
buffer stock (minimum):
is the minimum stock level held by a firm in case of late deliveries from suppliers, damaged stock or sudden and expected increase in demand.
re-order level:
refers to the stock level at the time when the firm places its re-order of stock.
usage rate :
is the speed at which inventories are depleted in the production process. It increases during peak-periods but drops during recession and off-peak periods.
Stockpiling:
means that a business builds up excessive levels of inventory. Holding too much stock results in working capital being tied up.
JIT
Just in time stock control system is designed to eliminate the cost of holding stock ex; stock maintenance security costs
JIC
Just in case stock control is designed to have a reserve (buffer) stock level. It ensures the firm has enough inventory to meet the demands of customers whenever required.
Quality Control (fulfill purpose & expectations - so not exclusive to expensive products)
Quality means that a product fulfills its purpose and meets the expectations of the consumers. Hence, quality is not exclusive to expensive products.
Advantages & Disadvantages of Quality Management
Advantage: Prevents faulty products and so safeguards the firm’s reputation.
Disadvantage: Individuals are not accountable for the quality of their work, so slack is encouraged.
Lean Production (limit time, energy, effort, material WASTE):
Removing all the operations or processes that don’t add any value to the product (making efficient use of resources). Right time approach; it’s easier to prevent mistakes than to try to correct them.
kaizen
The kaizen process involves forming small groups of employees whose role is to identify changes and improvements to the organization’s products, processes and procedures. THE AIM is to establish a steady flow of small improvements rather than one big radical change.
kanban
The Kanban method is a method of lean production created to insure that inventory is based on actual customer orders rather than sales forecasts. A typical kanban card shows operatives what is to be produced, what quantity and when it needs to be made. (ex; ordering sushi)
Outsourcing / subcontracting:
Is the practice of subcontracting non-core activities of an organization to a third party provider (an external organization) in order to improve operational efficiency and reduce costs. -» cuts costs and gain from the third-party’s expertise (ex security)
Offshoring
is the practice of relocating part or all of a firm’s business functions and processes overseas. These functions can remain within the business (operating in an overseas market) or outsourced to an overseas organization. (ex manufacturing, call centers…)
Insourcing
is the use of a firm’s own resources to fulfill a certain role or task which would otherwise have been outsourced.
break-even analysis.
Analysis that helps finding the point at which total revenues equal total costs
Total Cost =
Fixed Costs + Variable Costs
profit=
Total Revenues - Total Costs
break-even=
Total Revenues - Total Costs = 0
unit contribution=
price (Average Revenue) - Average Variable Costs
Break-Even Quantity=
Total Fixed Costs / Unit contribution
Opportunity Cost:
Opportunity cost represents the potential benefits that a business, an investor, or an individual consumer misses out on when choosing one alternative over another.
Cost-to-Buy vs. Cost-to-Make:
A make or buy decision involves managers choosing whether to manufacture a product in house (make) or to purchase it from a third party subcontractor (in other words, insourcing or outsourcing)
Cost to buy:
Using third party suppliers can create flexibility and capacity for the business, such as dealing with unexpected fluctuations in the level of demand. Subcontractors may also be more productive and cost effective. Cost to buy= price x quantity
Cost to make :
in house production enables the organization to have a closer control over costs and quality. It also allows the business to have better overall management of the production process.
Cost to make= total fixed costs + total variable costs.
Supply Chain:
Supply chain management is the handling of the entire production flow of goods or services—starting from the raw components to delivering the final product to consumers.
crisis
a crisis can be defined as any unpredicted event that has widespread negative consequences. In the business context, it means a crisis causes major disruptions to the normal operations of an organization.
CRISIS MANAGEMENT:
is about the response a business takes in the event of an actual threat, disaster or crisis. It is about the way in which a business reacts during a real crisis. This is particularly important if the crisis is major enough to threaten the survival of the business.
CONTINGENCY PLANNING:
Is about devising and developing pre-arranged plans to deal with a crisis, in case it actually occurs. It involves the use of risk assessments in order to better prepare for a crisis, such as fire, should it ever happen
