Operations UNIT

Question 1

what is operation management

Answer 1

The use of resources – land, labor, and capital – to provide goods and services that will satisfy demands identified by the market research department

Question 2

What is the aim of operation managers ?

4

Answer 2

Produce goods and services of the required quality in the required quantity at the time needed in the most cost effective
way.

The efficiency of production: Keep costs low – competitive advantage

Quality: Good or service must be suitable for the purpose intended

Flexibility: Need to adapt to new methods of working and new products

Question 3

what is Added value and its factors?

Answer 3

the difference between the cost of purchasing raw materials and the price the finished goods are sold for.
Factors:
Design - of the product

Efficiency of input-resources are combined and managed

Impact of promotional strategy – whether it convinces consumers to pay more (and how much more) for the product.

Question 4

What is production?

Answer 4

The process of taking resources (inputs) and changing them (adding value) into products (outputs) to make a profit

Question 5

What is Productivity?

Answer 5

the ratio of outputs to inputs during production.

Labour/capital productivity

Question 6

How to calculate Labour productivity ?

Answer 6

total output in a given time period / Total workers employed

Question 7

How to calculate capital productivity ?

Answer 7

output / capital employed

Question 8

How to calculate unit labour cost?

Answer 8

total wage costs / Output

Question 9

How to raise productivity levels?

4

Answer 9

• Improve the training of staff to raise skills levels
• Purchase more technologically advanced equipment
• Improve employee motivation
• More efficient management

Question 10

What is efficiency ?

Answer 10

Producing output at the highest ratio of output to input

Question 11

What is effectiveness ?

Answer 11

Meeting the objectives of the enterprise by using inputs productively to meet customer’s needs.

→ It means meeting customers’ needs profitably.

=> It is about putting inputs to productive use to achieve the objectives of the business

Question 12

What is labour intensity?

Answer 12

High level of labour input compared with capital equipment

Question 13

What is Capital intensity?

Answer 13

production uses a high quantity of capital equipment

Question 14

One ad/dis of Labour intensity?

Answer 14

Advantage : High quality product

Disadvantage : Difficult to increase labour productivity

Question 15

One ad/dis of capital intensive ?

Answer 15

Advantage : Economies of scale

Disadvantages : High fixed costs, maintenance costs, technological changes causing equipment to be obsolete.

Question 16

What is Operation planning?

Answer 16

Preparing input resources to supply products to meet expected demand.

Question 17

Which departments does operation needs to coordinate with? (3)

Answer 17

Finance department – cashflow
HR department – labour input
Marketing department – strategy

Question 18

Why is marketing link important?

Answer 18

Estimated/forecast market demand

Question 19

Marketing link: With accurate sales forecasts what is operation able to ? (5)

Answer 19

1. Match output closely to the demand levels (no surplus)
2. Keep stock levels to a minimum efficient level
3. Reduce wastage of production (outdated products)
4. Employ and keep appropriate number of staff
5. Produce the right product ‘mix’ (range of products that are forecast to be demanded

Question 20

What is operational flexibility?

Answer 20

To be able to vary both the level of production and the range of products following changes in customer demand.

Question 21

How can operational flexibility be achieved ? (4) and what are its disadvantages ?

Answer 21

1. Increase capacity by extending buildings and buying more equipment
   –> expensive option
2. Hold high stocks
   can be damaged
   opportunity costs
   –-> capital tied up
3. Flexible and adaptable labour force
   –> temporary, part-time contracts reduces fixed salary costs but may reduce worker motivation
4. Flexible flow-line production equipment
   –> Mass customization

Question 22

What is process innovation ?

Answer 22

The use of a new or much improved production method or service delivery method

Question 23

Examples of process innovation ?

Answer 23

1. Robots in manufacturing
2. Faster machines to manufacture microchips for computer
3. Computer tracking of stocks (barcodes and scanners)
4. Using the Internet to track the exact location of deliveries/orders

Question 24

What is Job production ? Requirements (2)

Answer 24

Used in production of single, one-off, unique products designed for the customer

1. Only one product at any time in being made.
2. Product A has to be completed before starting on Product B

Question 25

Advantages of Job production (2)

Answer 25

- Motivating – see the project from start to end | - Allows specialised products to be produced

Question 26

Disadvantages of Job production (3)

Answer 26

- Expensive - Takes a long time for completion - Labour intensive and need to be highly skilled

Question 27

What is Batch production? | Requirements

Answer 27

Producing a limited number of identical products. 1.each item in the batch passes through one stage of production before passing on to the next stage.

Question 28

Advantages of batch production (3)

Answer 28

- Division of labour - Economies of scale - Design of each batch can be altered

Question 29

Disadvantages of Batch production (2)

Answer 29

- High levels of WIPs at each stage of production | - Boring (and demotivating)

Question 30

What is flow production? | Requirements (3)

Answer 30

Producing items in a continually moving process 1. Individual products move from one stage to next as soon as they’re ready – no need to wait for the other products (unlike batch production) 2. Large quantities produced in short time – suitable for industries with high and consistent demand with minimum alterations 3. Needs to be carefully planned- cannot allow disruptions to the system.

Question 31

Advantages of Mass production (3)

Answer 31

1. Labour costs low – mechanised, low physical handling of the products 2. Constant output – stock levels input can be planned, controlled and minimised 3. Quality remains high – easy to check and control

Question 32

Disadvantages of Mass production (2)

Answer 32

1. High set up costs – machines are high tech – capital intensive 2. Boring, demotivating and repetitive

Question 33

What is cell production and its requirements ?

Answer 33

→ Like mass production, but separated to a self-contained mini-production units à cells Each cell responsible for quality and targets

Question 34

AD of cell production (3)

Answer 34

1. Motivating and creates ‘friendly’ competition (amongst cells) 2. Leads to worker commitment --> motivation --> productivity 3. Leads to well trained, multi-skilled workforce

Question 35

Dis of cell production (2)

Answer 35

1. Dependant on well trained, multi-skilled workforce | 2. Only works if cell dynamics ‘gel’

Question 36

What is Mass customisation ? and its requirements (4)

Answer 36

The use of flexible, computer-aided production systems to produce items to meet individual customers’ requirements at mass-production cost levels 1.Latest technology + Multi skilled labour force = wide ranging products 2. Move away from mass production/identical products Keep some aspects the 3. same, low unit costs, greater product choice 4. Higher added value

Question 37

How to choose which production method to use? (3)

Answer 37

1. Size of market (market demand) a. For products adapted to specific customer requirements b. Cost advantage and different products for different market – mass customisation 2. Amount of capital available 3. Availability of other resources (Level of technology available)