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business > Section 4 - Operations management (Chap 18 - 21) - stocks, production productivity, costs, break even, EOS, quality production > Flashcards

Section 4 - Operations management (Chap 18 - 21) - stocks, production productivity, costs, break even, EOS, quality production Flashcards

1
Q

what does operations management do

A

-process input to give output
-has multiple manager in charge of different things

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2
Q

labor/ capital productivity formula (humans/ machines)

A

output/ no. humans/ machines

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3
Q

productivity formula

A

no. output/ no. input

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4
Q

what do manufacturing businesses have typically

A

-factory manager - responsible for no. & quality of products
-purchasing manager - provides materials
-research & development manager - responsible for design & testing of new products

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5
Q

define production

A

making products/ services

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6
Q

labor productivity formula

A

no. output/ no. employees

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7
Q

define productivtiy

A

-how efficiently products are made

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8
Q

ways to increase productivity

A

-improve quality control to reduce waste
-employee motivation
-new technology
-use machines instead of people
-train staff to be more efficient
-improve inventory control

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9
Q

what happens when too less/ more inventory

A

less:
-run out of stocks
-no production
-waste money
more:
-storage & security cost up
-shelf life - lead to wastage
-money spent at first

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10
Q

define stocks

A

resources needed to make goods/ provide service

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11
Q

3 types of stocks

A

-raw materials: basic form
-work in progress: some work done
-finished goods: final product

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12
Q

define stock chart

A

chart used to help maintain stocks

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13
Q

how does stock chart work

A

-quantity over time
-max, reorder & min. level where stocks should not go over/ below max & min.
ideally:
-start at max level and slowly go down
-once below reorder level, order stocks again
-when min. level (buffer inventory), restocks come
-line down is usage of stocks
-line up is restocks

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14
Q

define buffer inventory

A

stocks held for uncertain delivery of supply or customer demands

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15
Q

types of waste in produciton

A

-overproduction - storage cost, possible damage
-waiting - good’s aren’t being processed
-transport - moving goods around
-unnecessary inventory - takes up space
-motion - action by employee wastes time
-over processing - machine for simple tasks
-defects - waste time inspecting product

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16
Q

define lean production

A

-producing goods using fewer resources without dropping quality

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17
Q

define buffer inventory

A

stocks held to deal with uncertain deliveries of supply & customer demand

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18
Q

ways to do lean production & what they cause

A

-cut down wastage
-store less raw materials
-better use of equipment
-use each resource to the max
-practice kaizen
-practice just in time
cause:
-more efficiency
-less cost
-more saving

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19
Q

define just in time

A

-a method to avoid keeping large stocks of raw materials & finished goods
-save money & space

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20
Q

define kaizen

A

continuous improvement by reducing waste

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21
Q

ways to do kaizen & what they cause

A

-don’t have too many goods which won’t be sold on time = no loss
-get supplies right on time = no loss
-less holidays for workers = more efficiency
-no expensive machine for simple tasks = better us of materials
-no faulty products = save time to fix them
-eg. reduce time for workers to walk btw jobs

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22
Q

ways to do just in time & what they cause

A

-buy raw materials only when needed
-make product just in time to give to customer
cause:
-no cost to hold stocks
-warehouse space not needed = less cost
-product sold quickly, money comes back, better cash flow

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23
Q

note: rationalize stocks depending on price & frequency of use

A
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24
Q

define cell production

A

-where groups of people work together in cells to produce the final product
-promotes healthy rivalry
-motivates = more efficient, less likely for strike

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25
Q

3 method of production

A

-job production
-batch production
-flow production

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26
Q

define job production & eg.

A

-making 1 product at a time
eg. houses, tailors

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27
Q

advantages of job production

A

-for customized products - can charge high price
-product meets exact requirement of customer
-more varied tasks for workers = more motivation

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28
Q

disadvantages of job production

A

-need skilled workers = more cost
-labor intensive = expensive
-takes long time
-errors can be expensive
-materials specifically bought = high cost

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29
Q

define batch production & eg.

A

-products of same batch made in limited quantity
eg. bakeries, clothes

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30
Q

advantages of batch production

A

-production can change from 1 product to another
-variety for workers = motivation
-variety consumer choices

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31
Q

disadvantages of batch production

A

-expensive
-machines reset btw production = delay in production
-need warehouse space for stocks
-quality may differ from batch to batch
-if quality is bad: recall products with batch no. compensate, loss of money & reputation

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32
Q

define flow production

A

-producing the same product in unlimited quantities
-eg. cars, food

33
Q

advantages of flow production

A

-high output
-low cost = low prices = high sales
-capital intensive = low labor cost, more efficiency
-capital intensive = unskilled workers, little training
-operate 24/7 = more output
-consistent quality

34
Q

disadvantages of flow production

A

-demotivation for workers
-need lots of stock storage
-production line set up is expensive
-if a machine breaks down, production line stops
-needs a huge demand for product
-little variety in products

35
Q

factors affecting production choice

A

-nature of product = type of product/ service
-nature of demand = high demand, batch/ flow production
-size of market = bigger market, bath/ flow production
-size of business = how much money business wants to invest

36
Q

types of technology in production

A

-Automation: comp. control production process, few workers oversee process
efficient, more precise, training workers cost
-Mechanization: machines in factory operated by humans
use machine to do dangerous tasks, training workers cost, 24/7, accurate machines
-CAD: Comp. Aided Design - designing products done through comp. eg. software
expensive, for detailed technical drawings
-CAM: Comp. Aided manufacturing - comp. controls factory machines
expensive
-CIM: Comp. Integrated manufacturing - CAD linked to CAM

37
Q

types of technology in payments

A

-EPOS: Electronic Point of Scale - in checkouts
product detail & payment goes to database of things bought
print receipts
-EFTPOS: Electronic Funds Transfer at Point of Sale eg. credit car, QR code
online money in bank transferred after payment by swiping card
-Contactless payment:
paying without pressing buttons for small amounts of money
fast, easy

38
Q

advantages of technology in production/ services

A

-more efficient, more output, more productivity
-less workers, can lower prices
-less expensive in long run
-training will make workers skilled = motivated workers
-better and consistent quality
-safer workers
-better com. with comp.

39
Q

disadvantages of technology in production/ services

A

-initially expensive
-unemployment
-demotivation
-training workers cost money
-bad for environment
-tech. gets outdated quickly
-cyber attacks
-maintenance

40
Q

define revenue & formula

A

-money from selling goods/ services
units sold x selling prices

41
Q

note:
fc = fixed cost
vc = variable cost
EOS = economies of sclae

A
42
Q

formula for profit

A

-revenue - total cost
-margin of safety x unit contribution

43
Q

define variable cost & formula

A

cost that varies directly with no. items sold
no. units x vc per unit
eg. textbooks for students, raw materials

44
Q

define fixed cost

A

cost that doesn’t change with no. items sold
eg. rent, electricity, worker salary

45
Q

define total cost & formula

A

-fc and vc combined
-fixed cost + variable cost
-avg cost x output

46
Q

uses of break even graph

A

-can set on a selling price
-can choose to lower costs
-choose to stop making a product
-helps determine location of business
-can know when to accept bargains

47
Q

goals for selling price

A

-make it low but cannot be below fixed cost
-don’t change quality

48
Q

define avg cost for each unit & formula

A

-total cost divided by no. output
total cost/ units sold

49
Q

uses of finding cost data

A

-set prices that is not a loss
-stop or continue production of a product
-decide on location of business

50
Q

how to draw break even graph
need:
-fc
-vc
-total cost
-total revenue
-units sold

A

-x = units of production
-y = cost & revenue
-fc; flat line
-vc; uniform line from 0
-total cost; line from fc
-sales revenue ; uniform line from 0
-break even point; intersection btw sales revenue & total cost - above = area of profit/ below = area of loss
-break even level of output = output below break even point
-margin of safety = break even level of output to units sold
-STOP THE GRAPH AT THE NO. OF OUTPUT

51
Q

define contribution & formula

A

-value added to product
-vc + profit
(not profit)
unit contribution:
-selling price - variable cost per unit

52
Q

why & when should you accept bargains

A

-offered price> fc = accept
-offered price< fc = decline
-to remove stocks

53
Q

goals for fixed & variable cost

A

-keep fixed cost as low as possible = lower prices = more profit
-keep variable cost same = quality don’t go down

54
Q

define Economics of scale EOS

A

-factors that led to a lower avg cost as business grows
(making more units with the same amount of fct)
benefits:
-can bargain with raw materials
-unit cost is lower

55
Q

define Diseconomies of scale DisEOS

A

-factors that led to a higher avg cost as business grows

56
Q

how to draw EOS graph

A

-x = output
-y = unit cost
-EOS = line goes down
-DIsEOC = line goes up; when fc increases = unit cost increases

57
Q

advantages of break even graphs

A

-find is expected profit/ loss
-redrawing graph shows impact of business decisions
-set on selling price
-show margin of safety
-choose to stop making a product
-helps determine location of business
-can know when to accept bargains

58
Q

disadvantages of break even graphs

A

-assumes all goods are sold
-fc is only constant if scale of production doesn’t change
-assumes that cost & revenues can be drawn in a straight line
-focuses on break even point of production than other aspects of business
-assumes selling price is constant

59
Q

define margin of safety & formula

A

-no. units that exceed break even level of output
no. units sold - break even point level of output

60
Q

factors of EOS for big businesses

A

1) purchasing economies
-buying bulk = discounts & bargaining
-buy directly from manufacturers = cheaper
2) marketing economics
-use same add worldwide
-have own delivery trucks than relying on others
3) financial economics
-easier for business to get loans or sell shares; less risky for banks = low interest rate = low avg cost
4) managing economics
-hire experts to manage business
5) technical economics
-invest in machines & technology = produce high output with less avg cost

61
Q

factors of DisEOS for big businesses

A

1) poor communication = low efficiency/ high avg cost
-hard to com. with big business
-mis com.
-com. break downs
2) lack of motivation = low efficiency
-too many workers = feel under valued
-don’t understand people personally
3) weak coordination
-too many things happening = don’t know what’s going on
-need more coordinators = more fc

62
Q

define break even level of output

A

no. units that must be sold for total cost = total revenue
-total fc/ unit contribution

63
Q

define break even point & formula

A

-when total cost = total revenue ( no profit or loss)
fc/ unit contribution

64
Q

define break even charts

A

-chart that shows cost & revenue change with sales & break even level of output

65
Q

benefits of good quality

A

-easier to get customers
-creates brand image
-brand loyalty
-better reputation
-more sales, more profits

66
Q

result of bad quality

A

-customers go to competitors
-defect products need to be fixed
-bad reputation
-sued

66
Q

ways to maintain quality

A

-quality control
-quality assurance

67
Q

define quality

A

producing good service/ goods that meet customer expectations

68
Q

define quality control & how does it work

A

-checks defects in products at the end of production by an inspector
-picks samples to check on

69
Q

advantages & disadvantages of quality control

A

advantage:;
-stop customers from getting defect products
-less training for workers
disadvantages:
-expensive = need to pay for inspectors
-high cost if need to redo products
-allows defect products to be made already
-picks a sample amount to check = assumes about other products

70
Q

define quality assurance & how does it work

A

-checks defects in product in every stage of production
-everybody checks

71
Q

advantages & disadvantages of quality assurance

A

advantages:
-stop defect products from getting to next stage of production
-less customer complaints
-less cost if products don’t need to be redone
disadvantages:
-time consuming
-expensive to train workers to check
-workers need to be committed to standard set2

72
Q

define Total quality management TQM

A

-continuous improvement of products to get good quality products at every stage
-aim: 0 defected products
-everyone thinks about quality

73
Q

advantages & disadvantages of Total quality management

A

advantages
-everyone focuses on quality
-stop customers from getting defect products
-no customer complaints
-less cost = no redo of products
-less waste
-more efficient
disadvantages:
-expensive
-everyone has to follow TQM & be accountable for it

74
Q

define quality standards

A

-product has to match a certain quality that gov. specifies
-if gov. inspector thinks it is acceptable, product can have a logo saying it it approved by gov.

75
Q

define quality circles

A

-workers are in charge of quality & meet regularly to discuss problems & find solutions

76
Q

note: add formula in definition & apply context to Q

A
77
Q

note: DO NOT GO OVER THE OUTPUT LINE FOR BREAK EVEN GRAPH

A

business (10 decks)

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