Theme 2: Topic 2.3 Making operational decisions Flashcards
What does the production process involve?
A business using its resources to produce goods and provide services that customers can buy
What are the three production methods?
Job production
Batch production
Flow production
What is job production?
One-off products that focuses on customer needs
What are the advantages of job production?
High profit margins
What are the disadvantages of job production?
Specialist workforce needed so increased costs
Longer production process
What is batch production?
A larger volume of products being made with breaks in between
What are the advantages of batch production?
Some flexibility
Cheaper workforce than job production
Some levels of automation
What are the disadvantages of batch production?
Productivity reduced
What are the advantages of flow production?
High volumes of low margin products
Highly automated
Low skilled workforce
What are the disadvantages of flow production?
Expensive machinery
Not much flexibility
What are examples of tech in business operation?
Computer-aided design
Supply chain management
GPS
3D printing
What are the advantages of technology on operations?
Speeds up the production process
Keeps businesses in touch with their customers
Lowers production costs
Ensures fewer mistakes and defects
What are the disadvantages of technology on operations?
Can involve a costly initial investment
Can quickly become obsolete
Requires employees to be trained to use new technology
What does economies of scale mean?
A term that describes the situation where the average costs of production fall as the volume of production increases
Define productivity?
The output per worker
What factors affect choice of technology?
Productivity
Cost
Flexibillity
Quality
What is the maximum stock level?
The most stock that a business can hold
What is the re-order level?
The level of stock at which new stock will be ordered by
What is the buffer stock?
The lowest amount of stock the business will hold
What are advantages of holding stock?
Any unpredicted surges in demand can be met
Damaged goods can be replaced
Businesses can recieve discounts for bulk buying
Limited risk of problems supplying customer demand
What are advantages of holding little or no stock?
Cost saving in not having to store stock
Less chance of damaged or stolen stock
Employees can focus on tasks other than managing stock
Can reduce costs of production, which makes product pricing more competitive
