Setting Operational Objectives Flashcards
What is operations management?
The process that uses the resources of an organisation to provide the right goods or services for the customer.
Providing the “right” goods or services means providing “what the customer wants”. This may vary between customers
- for example it may mean quality and price to one, but convenience and flexibility to another!
What is the operations process?
Inputs ( Land, Labour, Capital, Enterprise) -> Transformational Process -> Outputs (Goods & Services)
What is included in operations?
- Efficient methods of production to reduce costs
- Minimising waste
- Choosing the mix of resources to use in production
- Managing capacity utilisation
- Using technology to improve operations
- Ensuring quality
- Providing flexibility, speed of response and dependability
- Organising inventory control (stock)
- Working closely with suppliers
What are types of Operational Objective?
• Costs
• Quality
• Speed
• Flexibility
• Dependability
• Environmental
• Added value
Info about costs
Lowering costs makes a business more competitive.
Common cost targets include:
• Reducing Fixed Costs
• Reducing Variable Costs
• Reducing Unit Costs
What is unit costs?
The cost of producing one unit of output
What is the unit cost formula?
Total Costs/ No. of units produced
What is quality?
‘Those features of a product or service that allow it to satisfy (or delight) customers’
What does quality include?
Includes:
• Scrap/defective outputs
• Customer Service
• Customer Returns
How to measure quality?
Many different measures - some examples :
• Customer satisfaction ratings - quantitative ratings / qualitative ratings
• Customer complaints - Often shown as a percentage of all business. One unhappy customer can really damage a company’s reputation.
• Level of product returns - targets are often based on previous levels or competitors levels.
• Scrap rate -The number of items rejected during production as a percentage of the number of units produced. Shows a firm where work there may be problems.
• Punctuality - Important to know how many deliveries arrive on time.
Punctuality (%) = (Deliveries on time/Total Deliveries) X 100
What is speed?
The time taken for a customer requirement to be fulfilled.
What is flexibility?
‘the ability of an organisation to change its operations in some way’
What can flexibility mean?
Flexibility can mean:
- Product Flexibility
- Volume Flexibility
- Mix Flexibility
- Delivery Flexibility
What is dependability?
‘Measures whether a business is “on time” in providing for its customers’ needs’
Examples of dependability
• For services dependability may = consistent quality or punctual delivery
• For products it may mean durable, long lasting.
• Downtime(Production)
• Maintenance cost
• Reputation for quality
