Operations Management Within A Business Environment Flashcards
Types of Production
Job, Batch, Flow, Lean
PESTLE
Political Economic Social Technological Ethical Legal Environmental
How to add value
Build a brand Deliver excellent service Product features and benefits Offer convenience Lower costs
Benefits of adding value
Can change a higher price
Creates a point of difference from competitors
Protects from competitors asking customers
Focuses a business on its target market
Lower average costs
Invention
An entirely new product is created for the first time
Innovation
An existing product is improved, using a new idea or approach
Market orientated
When a business reacts to what the the customer needs or wants
Product orientated
The business develops products based on what it is good at making or doing
Job
Products are made individually that are Iquitos to a customer’s standards
Advantages of job production
Better quality Can change higher price staff are motivated due to variety Greater flexibility Customer requirements can be handled
Disadvantages of job production
Slow and labour intensive Higher average costs Must have high skilled, expensive workers Do not Benfro from EoS Requires close working with the client
Batch production
A group of identical products are made at once. The product being made can change
Advantages of batch production
Many products made Lower average costs Benefit from EoS Customers still retain some choice of productCan hire less products Faster than job Some flexibility
Disadvantages of batch
Greater risk of error Not motivational for worker Higher initial costs Down time between batches Must store the resources
Flow production
Also called mass production, there is a continuous flow of items moving through the production process
Advantages of flow production
EoS- lower average cost per unit
Fastest method
Can hire less, and less skilled, workers
Disadvantages of flow production
High initial costs and set-up time
Demotivated worker
Customers get very little choice
If something happens whole production is stopped
Process production
The act of changing a raw material into a finished product
Cell production
The whole production process is split amongst a team into small groups called cells
Advantages of cell production
Shorter lead times Higher productivity Decreased throughput Improved quality Increased output Less work in progress goos have to be stored Workers are much more motivated
Disadvantages of cell production
Low equipment utilisation
If equipment goes down, so does whole cell
Higher cost per unit
Any small change can have a large impact on the whole structure
Not suitable for all types of products
Factors that may cause a change in production method
Culture, nature of product, cost of machinery, workforce, finance, customers, competition, stakeholders / objectives, practicality of change
Productivity
Output per unit of input which can be applied to any factor of production
Factors of production
Land, labour, capital and enterprise
Division of labour
Occurs when labour is split into many different tasks
Productivity formulas
Number of goods produced divided by average number of employees
Output divided by number of employees and machines
Sales revenue divided by number or value of machines
Sales revenue divided by wage bill or number of employees
Economies of scale
A reduction in unit costs achieved as the scale of production increases
Diseconomies of scale
An increase in unit costs as a result of a decrease or increase in production
Internal growth
When a firm grows naturally over time simply done by increasing its size to satisfy an increase in demand
External growth
When a firm grows quickly by merging with, or taking over another business
Internal economies of scale
Achieved as a result of. Firm growing internally
External economies of scale
Achieved by a firm as a result of growth Edith in the industry in which it operates
