Production Planning

Question 1

production planning

Answer 1

refers to the management process
of ensuring sufficient resources are available for use to create
finished products in a timely manner to
meet the needs of customers

Question 2

supply chain

Answer 2

different stages of activities from the production of a good or service to it being distributed to the end customer

Question 3

supply chain management

Answer 3

the art of managing
and controlling these activities, which must be efficient and cost effective for a business to be profitable

Question 4

global supply chain

Answer 4

the networks that span multiple countries and regions for the purpose of sourcing and supplying goods and services

Question 5

functions of SCM

Answer 5

stock control, quality control, supplier networks, transportation networks

Question 6

just in case (JIC)

Answer 6

the traditional stock control system that
maintains large amounts of stock in case there are supply or demand fluctuations

Question 7

buffer/reserve stock

Answer 7

extra inventory kept on hand in case of manufacturing delays or an unexpected increase in demand

Question 8

stock

Answer 8

materials, components and products used in a production process

Question 9

raw materials

Answer 9

primary resources used for production

Question 10

work-in-progress

Answer 10

semi-finished goods (components used in production process)

Question 11

finished goods

Answer 11

complete units of output ready for sale

Question 12

stockpiling

Answer 12

when a business over-produces and holds too much stock, so it is detrimental to the firm’s cash flow position

Question 13

stock out

Answer 13

if a business does not hold enough stocks to
meet orders for production

Question 14

reorder level

Answer 14

level of stock when a new order is placed

Question 15

reorder quantity

Answer 15

amount of new stock ordered (max stock - min stock)

Question 16

productivity rate

Answer 16

degree of efficiency in the use of resources during the production process

Question 17

labour productivity

Answer 17

measure of the efficiency of a firm’s
workers by calculating the output per worker

Question 18

lead time

Answer 18

measures the duration between placing an order and receiving it

Question 19

operating leverage

Answer 19

measures a firm’s fixed costs as a percentage
of variable costs (fixed costs / variable costs x 100)

Question 20

productivity

Answer 20

how well resources, such as labour or
capital, are used in the production process

Question 21

productive capacity

Answer 21

a firm’s maximum (potential) output if all its resources are used fully and efficiently

Question 22

capacity untilisation

Answer 22

measures a firm’s existing level of output
as a proportion of its potential output

Question 23

capital productivity

Answer 23

measures how well a firm uses its capital in order to produce goods and services

Question 24

cost to buy

Answer 24

the expenses or expenditure to
purchase a product from a third-party or outsourced supplier

Question 25

cost to make

Answer 25

the expenses or expenditure
required to manufacture a good or service in-house

Question 26

defect rate

Answer 26

measures the proportion of output, per time
period, that is substandard.

Question 27

operating leverage formula

Answer 27

total contribution / profit x 100

Question 28

capital productivity formula

Answer 28

total output / number of capital hours

Question 29

productivity rate formula

Answer 29

total output / total input

Question 30

labour productivity formula

Answer 30

total output / number of workers

Question 31

defect rate

Answer 31

• defect output / total output x 100
• defected units / number of units tested x 100