Operations Strategies

Question 1

Capital intensity

Answer 1

The extent to which production or operations depend on investment in and use of capital – i.e. machinery, IT systems, buildings etc

Question 2

Critical path analysis

Answer 2

Project management tool that uses network analysis to help manage complex and time-sensitive operations

Question 3

Diseconomies of scale

Answer 3

Factors which result in higher unit costs as production output reaches too high a level

Question 4

Economies of scale

Answer 4

Cost advantages that a business can exploit as a result of expanding its scale of production. Economies of scale reduce the average (unit) cost of production

Question 5

Efficiency

Answer 5

A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources

Question 6

Industrial inertia

Answer 6

Where a business decides to stay in its existing location despite potentially better locations being available to it

Question 7

Innovation

Answer 7

Putting an new idea or approach into action – the commercial exploitation of ideas

Question 8

Just-in-time

Answer 8

Method of lean production where production resources arrive at the moment they are required rather than being held in stock

Question 9

Kaizen

Answer 9

A cultural approach to lean production and quality assurance. Involves encouraging employees to constantly seek and implement small incremental changes to production in order to improve quality and efficiency

Question 10

Labour intensity

Answer 10

The extent to which production or operations depend on investment in and use of labour – i.e. people, training

Question 11

Labour productivity

Answer 11

The level of output per unit of labour

Question 12

Lead-time

Answer 12

The period of time between an order being placed and being received

Question 13

Lean production

Answer 13

An approach to management that focuses on cutting out waste whilst still ensuring quality.

Question 14

Marketing economies

Answer 14

Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output

Question 15

Minimum efficient scale

Answer 15

The minimum output a business needs to achieve in order for its to be able to minimise unit costs

Question 16

Multinational

Answer 16

A business which owns operations in more than one country

Question 17

Network analysis

Answer 17

Breaking a project down into separate activities and their requirements

Question 18

Offshoring

Answer 18

Where a business has work done for it overseas

Question 19

Outsourcing

Answer 19

Where a business has work done for it by someone else

Question 20

Productivity

Answer 20

Measures of how effective a business is in turning resources (e.g. labour hours) into output

Question 21

Purchasing economies

Answer 21

Cost savings that arise from buying in bulk or from a more powerful relationship with a supplier due to increased output

Question 22

Quota

Answer 22

A restriction on the volume or quantity of a good that can enter or be sold in a market (form of trade barrier)

Question 23

Scale

Answer 23

The size or output of a business, best measured relative to that of direct competitors

Question 24

Subcontracting

Answer 24

Part of outsourcing – where another business is used to provide part of the production process

Question 25

Tariff

Answer 25

A tax levied on imports to increase their price compared with domestic goods (form of trade barrier)

Question 26

Technical economies

Answer 26

Reductions in unit costs arising from the effective use of technology

Question 27

Unit costs

Answer 27

The key measure of productive efficiency – calculated as total costs divided by total output (over a specific period)