Operations Management within a Business Environment

Question 1

Explain why and how Operations Management and Objectives are used by a business.

Answer 1

• Provide a sense of direction
• Provide a motivational incentive to the employees involved
• May help to achieve the overall goals of the business.

Question 2

Explain Operations Management Objectives.

Answer 2

Objective is to utilize the resources of the organization, to create products that satisfy the needs of the consumers.

Question 3

Evaluate the usefulness of operations management objectives to a business and its stakeholders.

Answer 3

• Depends upon how realistic they are within the contect of the business and the business environment.
• Some targets may be unrealistic and may reduce motivation

Question 4

Explain the need for a business to have clear Operations Management Objectives.

Answer 4

• Help employees know what exactly is required of them
• Effeective communication is essential

Question 5

Evaluate the importance of operations management objectives in the achievement of a business’ objectives.

Answer 5

• Legal status and size of the business (sole proprietor profits may be smaller than a Public Limited Company)
• The other objectives of the business ( Wether it wants to create new products or make profits)
• State of the Economy ( Growing economy will make it easier to achieve targets)

Question 6

Recommend and justify Operations Management Objectives for a business.

Answer 6

Essential that objectives must be set taking into account all other sector of the business, a business needs to operate in unison not in isolation.

Question 7

Explain what is meant by Adding Value.

Answer 7

The difference between the actual price charged for a product / service and the actual cost of all the componenets and assembly of the product or service.

Question 8

Explain how you calculate Adding Value.

Answer 8

Added Value = Selling Price - Cost of Inputs

E.G - Selling Price = £20

Cost of Inputs = £12

20 - 12 = £8

It is worthwhile including a numerical example in any definition or example.

Question 9

Evaluate the usefulness of added value to a business and its stakeholders.

Answer 9

• A BUSINESS is concerned with adding value in order to make a profit, while ensuring there is a demand for the good.
• CONSUMERS are likely to be prepared to pay more for additional features.

Question 10

Explain what is meant by Innovation.

Answer 10

Is the introduction of a new idea, or method of production or new equiptment into the production process.

Question 11

Explain what is meant by Research & Development (R&D).

Answer 11

refers to the activities companies undertake to innovate.

Question 12

Explain the reason for innovation within a business and an industry.

Answer 12

• Is a new better idea that should result in an increase in productivity.
• Could solve problems in the production process.

Question 13

Explain the reason for Research & Development (R&D) within a business and an industry.

Answer 13

• Vital for competitive businesses to stay ahead of competition so the business can survive.
• Increasing Golbalisation leads to increasing competition who can benefit from cheaper labour, so investing in R&D ensures the businesses stay technologically ahead of the copmetition.

Question 14

Explain what is meant by Product Innovation.

Answer 14

Is the introduction of a new and usually better product to the market.

Question 15

Explain what is meant by Process Innovation.

Answer 15

is the introduction of a new production process that either improves productivityy and lowers costs or produces improvements in the original product, or produces a completely new product.

Question 16

Explain the process of Innovation.

Answer 16

Often arises as a result of research and development by the business, but could also be the suggestion of an employee, as a result of solving rpoblems in the production process.

Question 17

Explain the process of Research & Development.

Answer 17

Business spends money on research and development.

Question 18

Disadvantages of Research and Development to a business.

Answer 18

HIGH COST - R&D costs depend on the nature of the product

HIGH RISK - The money spend will be a cost without any revenue, often exaplain the high prices of certain products

COPYING FROM OTHER BUSINESSES - Danger of other copying any new ideas, companies that copy new ideas spend a lot less on R&D

LIMITED PROTECTION OF NEW IDEAS - Patents do not cover all aspects of the new product, nothing can prevent it from being copied if there are no patents applied to the product.

Question 19

What are the Advantages of Research & Development to a business?

Answer 19

UNIQUE SELLING POINT - Can drive product improvement.

INCREASING INCOME - unique products and services can bring financial benefits to the business. This is usually through generating new income streams, but R&D can also attract potential new investors to the business.

COMPETITIVE EDGE - through R&D, you can develop an advantage over your competitors and establish yourself as leaders in the market.

Question 20

What are the Advantages of Innovation?

Answer 20

• Improved productivity and reduced costs
• Better Quality
• Build a greater product range
• More added value

Question 21

What are the Disadvantages of Innovation?

Answer 21

• Very costly and time-consuming
• Business can run out of money if they invest too much and don’t create any new products

Question 22

What is Job Production?

Answer 22

Job Production - Involves producing a single item or product, bespoke, unique, tailor-made and one-off, concerned with satisfying a consumer’s specific needs.

Question 23

What is Batch Production?

Answer 23

Batch Production - Is used when there is stages that the production process needs to go through in order to create the product, one process has to be completed before the next stage of the production process can be started

Question 24

What is Flow Production?

Answer 24

Flow Production - Provides a continuous process, utilising a conveyor-belt approach, the product is assembled on a production line with employees undertaking specific repetitive tasks for each stage of the individual process.

Question 25

What is Cell Production?

Answer 25

Is the flow production line split into a number of self-contained units. Each team or ‘cell’ is responsible for a significant part of the finished article.

Question 26

What type of business may use Job Production?

Answer 26

A small, local busines.

Question 27

What are the Benefits of Job Production?

Answer 27

- Can meet consumer needs exactly - Better quality product because work is concentrated on a single item. - More motivated work force because they are invovled from start to finish of the product - Flexibility to produce whatever is required

Question 28

What are the Limitation of Job Production?

Answer 28

- No opportunities for benefitting from economies of scale - High costs of production - Labour is more skilled, and harder to find and more expensive to employ and train - Slower process

Question 29

What are the Benefits of Batch Production?

Answer 29

- System is able to produce larger quantities than job production - There may be some economies of scale - Batch production is generally faster than job production due to the larger amount of products produced - More flexibility then flow production to meet the needs of the consumer.

Question 30

What are the Limitations of Batch Production?

Answer 30

- Maybe a time delay between batches which means that nothing is being produced - The downtime between batches reduces the level of output when compared to flow production - As the level of production is higher, more stock needs to be held - Increased storage space for products waiting to go onto the next stage of production. - Not as much variation as Job Production - Less variety of work a lower level of skill required, therefore less motivating.

Question 31

What are the Benefits of Flow Production?

Answer 31

- Business is able to gain the benefits of economies of scale and reduce costs - Business can benefit from the division of labour and reduce costs further - Can produce a standardised product in very large numbers more quickly than others. - Unlike batch production, because flow production is continuous

Question 32

What are the Limitations of Flow Production?

Answer 32

- High start up costs because of the automated systems. - Takes a long time to plan a well function flow production - Lacks flexibility to produce a wide range of products - If the line stops then the whole production process is stopped - Any significant fall in demand will make the whole process uneconomical.

Question 33

What are the Benefits of Cell Production?

Answer 33

- Improve working conditions because employees are working as a team so they will stay more motivated - Waste is reduced because employees are responsible for work within their own cell, therefore reduces costs - Opportunities for job rotation within the team -

Question 34

What are the Limitations of Cell Production?

Answer 34

- Process is expensive to set up - Employees are normally involved in one small part of the production process, and is therefore considered harder to achieve a sense of pride.

Question 35

Explain what is meant by Specialisation and the Division of Labour.

Answer 35

- This occurs when a job or task is broken down in separate tasks.

Question 36

Explain the reasons for the introduction of specialisation and division of labour to a business and its stakeholders.

Answer 36

- Makes the task easier to perform and therefore quicker and cheaper to train an operative to perform a specific task. - Increases an operatives productivity and this increase output while lowering the unit cost and consequently improve the profit margin.

Question 37

Disadvantages of Division of Labour and Specialisation.

Answer 37

- Tasks may well become reptitive and therefore boring - Repitition may lead to lower motivation may lead to errors and a higher rate of labour turnover. - Employees may lose out if tasks are small and specific that can be automated and therefore create redundancies. -

Question 38

Evaluate the impact and importance of specialisation and division of labour to a business and its stakeholders.

Answer 38

SHAREHOLDERS - Benefit from increased efficiency and productivity, which leads to an increase in profits and therefore dividends. SUPPLIERS - Benefit from supplying more components (though they may be squeezed for lower prices) EMPLOYEES - Bored or de-motivated, due to the repetitive work. CUSTOMERS - Can buy the product at a reduced price due to increased efficiency and productivity (depends on elasticity)

Question 39

Why or why not may a business may want to change Methods of Production to BATCH PRODUCTION?

Answer 39

- May increase efficiency, but the initial outlay is very expensive - There will be a loss of production during the changeover - A very small business may not want to use batch production because it may not be able to satisfy consumer needs

Question 40

What does the decision of Changing the Method of Production depend upon?

Answer 40

- Nature of the products invovled - Actual cost of machinery - Budget of the business - Importance of its customer, in terms of meeting thier specific needs - Degree of competition in the market - Views of stakeholders in the business.

Question 41

Explain the production process for the provision of services.

Answer 41

ISO 9001 - All production process are conducted under control conditions

Question 42

Explain what is meant by Project Management.

Answer 42

Is a process which involves planning and organising activities using resources to help achieve the objectives of the business.

Question 43

What are reasons for using project management within business?

Answer 43

- Clear focus on objectives

Question 44

Explain why Critical Path Analysis is used by a business.

Answer 44

Is the process that allows for the overall time of a project to be calculate, and to allow a diagram to be drawn which shows when activities should start and finish.

Question 45

Explain how Critical Path Analysis is used by a business.

Answer 45

- Allows planners to see which activities can be undertaken simultaneously - Once the network is drawn, it allows the business to monitor the progress of the project