Role of Operations Management

Question 1

What is Operations?

Answer 1

A business processes that involves transformation or the conversion of inputs (resources) into outputs (goods and services)

Question 2

Value Adding

Answer 2

Creation of extra or added value as inputs are transformed into outputs

Question 3

Strategic Role of Operations Management

Answer 3

long-term, broad aims to help increase productivity, efficiency or quality affecting all key business functions

Question 4

Profit Centres

Answer 4

Aspects of the business that directly derive revenue and profits

Question 5

Cost Centres

Answer 5

Particular areas, departments, or sections of a business to which costs can be directly attributed

Question 6

Cost leadership

Answer 6

• A strategy where business aims to have the lowest cost or be the most price-competitive in the market
• Key aspect is that although trading through the lowest cost, the overall business should still be profitable

Question 7

Economies of Scale

Answer 7

cost advantages a firm incurs due to an increase in scale of business operations. This cost saving comes from the ability to purchase lower cost per unit of input and other efficiencies from improved use of technology and machinery

Question 8

Goods and Service Differentiation

Answer 8

another strategy of competing in markets involving distinguishing products (goods or services) in some way from those of competitors

Question 9

Standardisation

Answer 9

making of products that are homogenous or identical. Typically, this involves mass producing items in high volume, with no variety at a low cost per unit. Standardisation is directly related to economies of scale

Question 10

Standardised goods

Answer 10

goods that are mass produced, usually on an assembly line. They are uniform in quality and meet a predetermined level of quality. They are generally produced with a production focus.

Question 11

Customised goods

Answer 11

goods that are produced and varied according to the needs of consumers. They are generally produced with a market focus rather than a production focus.

Question 12

Perishable goods

Answer 12

generally have a short life span and are consumed quickly. The operations team would need to consider:

• High standards of quality, safety and cleanliness in operation processes
• Quick and effective distribution
• Appropriate packaging and cold storage processes both through production and distribution

Question 13

Non-perishable goods

Answer 13

generally more durable and may be found in different industries. The operations team needs to consider:

• Focus on quality and inventory management
• Quality of materials
• Production and distribution

Question 14

Intermediate goods

Answer 14

goods that are processed more than once.