Operations (unit 3) Flashcards
what is this department about?
it is the production of a product, where you turn the raw materials into a finished product which can be sold.
Why do businesses add value to products
so as they can make a profit
what is meant by inputs
factors of production (materials employees, machines, land)
what is meant by processes
job , batch, line production
what is meant by outputs
finished product
what are suppliers
the people you provide you with raw materials
Describe the factors you need to consider when selecting a supplier
COST OF RAW MATERIALS- the price charged by the supplier-costs need to be kept as low as possible to make a profit, low costs will improve the cash flow of a business
QUALITY OF RAW MATERIALS- how good the materials are- without high quality raw materials the finished product will not be of high quality, low quality raw materials will probably result in higher wastage
LEAD TIME/DELIVERY TIME- how long it takes to come in from when you order it- some materials need to be used in a certain time or kept in certain conditions (fresh food), if raw materials don’t arrive on time production might be postponed
QUANTITY OF DELIVERY- how much raw materials you need- there needs to be enough raw materials to allow production to continue, correct quantities of raw materials are required to satisfy customer demand
LOCATION OF SUPPLIER- where the supplier is- the further away the supplier the longer it will take for raw materials to arrive, the cost of delivery will be more the further away it is
RELIABILITY AND REPUTATION OF SUPPLIER-reliability, will they deliver when they say they will, reputation, what people think of the supplier- if the supplier doesn’t deliver on time the customer may not get their order on time, suppliers with a good reputation are likely to get more business compared to one that has a poor reputation
STORAGE SPACE AVAILABLE- how much space the business has to store raw materials until they need to be used- raw materials might be wasted if they cannot be stored in the right place, storage costs can be expensive
What is stock?
it is important to set stock levels for each product that a business sells
Name and explain the 5 types of stock level a business has to set
MAXIMUM - this is determined by how popular the stock is and what storage space is available
MINIMUM- is determined by how popular stock is and how long it takes emergency stock to arrive
RE-ORDER- is determined by how long it takes and order to be arrived, stock must be received before old stock runs out
RE_ORDER QUANTITY- will be set based on what the re-order stock level is, the re-order stock level should not take stock levels above the maximum stock level
LEAD TIME- this refers to the the length of time it takes a supplier to deliver stock once it has been ordered
what are problems that occur with overstocking
- high costs of storage
- high insurance costs
- high security costs
- the business will have a lot of money tied up in stock
- stock may go out of fashion and have to be thrown away
- stock may deteriorate
what are problems that occur with understocking
- business may run out of stock to sell
- unexpected changed in demand are hard to deal with
- if orders
what are problems that occur with understocking
- business may run out of stock to sell
- unexpected changed in demand are hard to deal with
- if orders are delayed, shelves may be left empty
- if customer cannot get stock they want they may go elsewhere
- high administrations costs caused by re-ordering stock all the time
name the three types of production
Job, Line, BATCH
describe the three types of production
JOB- involves making a product one at a time, from start to finish, before another is begun. The products made are usually hand crafted by skilled workers using very little machinery e.g. an artist, hairdresser, carpenter
LINE- involves passing an identical product down a line of production. At each stage on the line a different operation is carried out until the product reaches the end and it is completed.
BATCH- involves making a specific number of identical products in a batch, from start to finish, before a batch of a different product is then made. The products are made using a mixture of machines and people
What is labor intensive production?
when product is made using mainly employees
What is capital incentive production?
whaen products are made using only machines
Explain 2 benefits and 2 drawbacks of capital and lay our incentive production
LAUBOR
Ad- mass produced identical products can be made very quickly and cheaply
- the quality of each product can be checked at the end of the production line
Dis- if a machine breaks down the production line stops
-machinery can be expensive to purchase and maintain
CAPITAL
Ad- machines work faster than employees
-machines make less mistakes and errors than employees
Dis- machinery is expensive to purchase, replace and repair
-if a machine breaks down production may have to stop until is repaired
What are the benefits of producing a a high quality product
- customers will want to purchase the product
- a higher price can be charged for the product
- the product will be less likely to break down
- it will be easier to create a brand for the product
- less customer complaints
What are the drawbacks of producing a high quality product
- high staff training costs
- higher raw material costs
- higher inspection costs
How can a business ensure a they produce high quality products
- using good quality raw materials
- using employees who are skilled and trained
- using up to date
- testing the product to make sure it works before you sell it
- undertaking quality inspections to make sure there are no faults with the product
Name the three methods of quality control systems
Quality control
Quality assurance
Quality management
Describe quality control
Checked in two ways
- raw materials
- once it’s been made
Products that do not meet quality standards are thrown away which create high wastage costs
Describe quality assurance
Time is spend before production begins
-involves a group called a quality circle
Once production occurs, quality is inspected at certain points in the process
-employees may be responsible for checking and ensuring their own work
Describe quality management
The aim is to produce a fault free high quality product that meets customers’ requirements
This is done by
- not tolerating any errors in the production process
- setting up quality circles
- creating a clearly defined policy regarding quality standards
- providing staff with on going training that motivates them
How can a business ensure that it provides a high quality service
- delivering orders on time
- training staff to deal with customers quickly and in a friendly manner
- dealing with complaints fairly and quickly
- providing a customer helpline
- longer opening hours
- free delivery
How is ICT used in the operations department
- spreadsheet is used to calculate how much certain orders will cost or to maintain a record of how many items of stock are held
- database used to Maintain a record of suppliers details
- email can be used to send purchase orders to suppliers
- internet to purchase items online
- fax machine to send purchase orders to suppliers
