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Business: Theme 2, managing business activities > Resource management 2.4 > Flashcards

Resource management 2.4 Flashcards

1
Q

What is the definition of capacity utilisation?

A

The proportion of maximum possible output that is currently being used by a business

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2
Q

How is capacity utilisation calculated?

A

Actual output/maximum possible output X 100

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3
Q

What are 2 weakness of having a low capacity utilisation?

A

-Fixed costs are spread over fewer units of output leading to higher average total costs
-Workers may be made redundant leading to current employees having fears of being let go

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4
Q

What is one strength of having a low capacity utilisation?

A

Allows flexibility, and the business can respond to sudden changes in demand

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5
Q

What are three weakness of high levels of capacity utilisation?

A

-Staff under a lot of pressure
-Machines prone to breakdowns
-Less flexibility to respond to new orders

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6
Q

What are three ways to improve capacity utilisation?

A

-Outsourcing, increasing level of output
-Reduce capacity to decrease maximum poss. output
-Increase sales, requires more units to be sold

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7
Q

What is the maximum stock level?

A

The maximum amount of stock a business is able to hold in normal circumstances

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8
Q

What is the reorder level?

A

The level at which a business places a new order with its supplier

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9
Q

What is the minimum stock level?

A

Also known as buffer stock
The lowest level at which a business is willing to allow stock levels to fall

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10
Q

What is the lead time?

A

The length of time from the point of stock being ordered from the supplier to it being delivered

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11
Q

What are two disadvantages of holding buffer stock?

A

-Cost, requires storage space
-Opportunity cost, ties up capital that could invested elsewhere

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12
Q

What are two strengths of holding buffer stock?

A

-Competitive advantage, gain a reputation of being reliable
-Stable stock, able to respond in unexpected demands

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13
Q

What are two problems with holding too much stock?

A

-Storage costs are higher than necessary
-Risk of spoiled stock if products are perishable

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14
Q

What are two problems with holding too little stock?

A

-Business may run out of stock
-Sudden increases in demands can’t be met

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15
Q

What is Just in time stock management?

A

A process where raw materials are ordered as required and delivered as production starts

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16
Q

What are three advantages of JIT?

A

-Stockholding costs are minimised
-Cash flow is improved as money is not tied up in stock
-Teamwork is encourage, leading to motivation

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17
Q

What are three disadvantages of JIT?

A

-Bulk buying EOS is generally not possible
-Unreliable suppliers halts all production
-Administrative costs and complex planning

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18
Q

Give three ways to minimise waste

A

-Planning
-Sales tactics, reduce prices to encourage purchases
-Storage, careful stock rotation

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19
Q

What is lean production?

A

The minimisation of the resources used in production

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20
Q

What three examples of steps involved in lean production?

A

-Fewer materials used
-Less labour is used, normally capital intensive
-Space required for production is reduced

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21
Q

What are two competitive advantages from lean production?

A

-Lower unit costs so prices may be lower than competitors
-Better quality of output due to carefully managed production process

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22
Q

What is quality control?

A

Inspecting the quality of output at the end of the production process

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23
Q

What are two advantages of quality control?

A

-Specialists check the quality
-Inexpensive and simple way to check quality

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24
Q

What are two disadvantages of quality control?

A

-Bad quality products are waste of resources
-Little focus of the cause of defects

25
Q

What is quality assurance?

A

Inspecting the quality of production throughout the process

26
Q

What are two advantages of quality assurance?

A

-Quality issues identified early so less waste
-Cause of defects are identified so future products have better quality

27
Q

What are two disadvantages of quality assurance?

A

-Staff have to be trained, increasing costs
-Reworking may lengthen the production process

28
Q

What are quality circles?

A

Groups of workers meet regularly to solve quality problems in the production process

29
Q

What are two advantages of quality circles?

A

-workers may more motivated as they are involved in decision making
-Relevant and focused solutions are likely

30
Q

What are two disadvantages are quality circles?

A

-Management need to have trust in employees views
-Meetings must be organised regularly

31
Q

What is total quality management?

A

Organisation of the business with quality at its core and every worker responsible for quality

32
Q

What are two advantages of TQM?

A

-Quality in all aspects improves efficiency
-A culture of constant improvement exists

33
Q

What are two disadvantages of TQM?

A

-All workers must be committed and receive training regularly
-Careful monitoring and control is required

34
Q

What is Kaizen?

A

A business takes continuous steps to improve productivity through the elimination of all types of waste

35
Q

What are two competitive advantages from Quality management?

A

-Unit costs are likely to be low allowing to reduce its selling price to better compete
-High levels of quality can be used as an USP

36
Q

What is the definition of Production?

A

The transformation of resources into finished goods

37
Q

What is job production?

A

Manufacturers produce on product at a time as ordered by the customer

38
Q

What are two advantages of job production?

A

-High quality product
-Motivated workers

39
Q

What are two disadvantages of job production?

A

-Production is slow
-Raw materials are expensive

40
Q

What is flow production?

A

continuous manufacturing of standardised products

41
Q

What are two advantages of flow production?

A

-Low unit costs due to EOS
-Rapid production

42
Q

What are two disadvantages of flow production?

A

-Customisation is difficult
-Machinery can be expensive to purchase

43
Q

What is batch production?

A

Groups of the same product are produced as a batch

44
Q

What are two advantages of batch production?

A

-Workers can specialise
-Production can take place as the previous batch starts running out

45
Q

What are two disadvantages of batch production?

A

-Require careful coordination to avoid shortages
-Money is tied up in stock

46
Q

What is the formula for labour productivity?

A

Output/number of worker

47
Q

What is the formula for capital productivity?

A

output/number of machines

48
Q

What is productivity?

A

The output per input per hour

49
Q

What are three factors affecting productivity?

A

-Employee motivation
-Skills of staff
-Investment in capital equipment

50
Q

What is the link between productivity and competitiveness?

A

Businesses that increase their productivity are likely to be more competitive as prices can be lower

51
Q

What does efficiency mean?

A

The ability of a business to use its production resources as cost-effectively as possible

52
Q

When does maxima efficiency occur?

A

The point where the costs are at their lowest

53
Q

What are three factors affecting efficiency?

A

-Relocating or downsizing
-Standardisation of production process
-Lean production

54
Q

What is labour intensive production?

A

Using mostly physical labour in production

55
Q

What is capital intensive production?

A

Using mostly machinery and technology in production

56
Q

What are two advantages of labour intensive production?

A

-Low-cost production
-Provides opportunities for workers

57
Q

What are two disadvantages of labour intensive production?

A

-workers may be unreliable and need regular breaks
-Incentives and training costs

58
Q

What are two advantages of capital intensive production?

A

-Low cost production where output is high
-Machines can run without breaks

59
Q

What are two disadvantages of capital intensive production?

A

-Maintenance costs
-Breakdowns can delay production

Business: Theme 2, managing business activities (3 decks)

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