Topic 2.3 - Making Operational Decisions

Question 1

production

Answer 1

the transformation of resources (e.g. raw materials components and processes) into finished goods or services

Question 2

3 methods of production

Answer 2

• job
• flow
• batch

Question 3

bespoke

Answer 3

a product that is specifically tailored to the needs of an individual client

Question 4

job production

Answer 4

Manufacturers (humans) produce one product at a time as ordered by the customer

Question 5

pros of Job Production (2)

Answer 5

High quality product

highly skilled workers

Customised products can be produced (can demand a higher cost)

Question 6

job production cons (2)

Answer 6

Production is slow

Labour costs are high

Question 7

flow production

Answer 7

Continuous manufacturing of standardised products, usually on a production line

Question 8

flow production pros (3)

Answer 8

Low unit costs due to economies of scale

Rapid production

Usually highly automated (capital intensive)

Question 9

capital intensive

Answer 9

The term “capital intensive” refers to business processes or industries that require large amounts of investment to produce a good or service.

Question 10

cons of flow production (2)

Answer 10

Customisation is difficult/ products are typically all the same

Capital equipment can be expensive to purchase

Question 11

batch production

Answer 11

Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins

Question 12

batch production pros (2)

Answer 12

Able to make a variety of sizes or flavours

Can be partially automated

Question 13

batch production cons (2)

Answer 13

Not as flexible regarding customers’ tastes as job production

As batch production is not fully automated, costs may be higher than in flow production

Question 14

Unit cost

Answer 14

The total cost of producing one unit of output.

Question 15

Flexibility in production

Answer 15

Flexibility in production refers to how easy it is to install machinery and switch to different machinery which is required to manufacture different products (known as retooling)

Question 16

Explain one Impact of New Technology on Production Costs (2)

Answer 16

Traditional manufacturing processes require expensive tooling and machinery, which can be a significant upfront cost for small businesses

With 3D printing, the cost of manufacturing is reduced as there is no need for expensive tooling

Question 17

Explain one Impact of 3D printing on Production Productivity (3)

Answer 17

With traditional manufacturing, there are often long lead times for tooling and set-up, which can delay the production process

With 3D printing, products can be produced quickly and easily, with minimal lead times

This allows businesses to bring new products to market faster and respond more quickly to changing customer preferences

Question 18

Explain one Impact of New Technology on Production Quality (3)

Answer 18

Traditional manufacturing may find it difficult to produce complex or intricate designs resulting in variable quality

3D printing allows for precise and accurate production of complex shapes and designs,

resulting in higher quality products

Question 19

Explain one Impact of New Technology on Production Flexibility (3)

Answer 19

With 3D printing products can easily be customised to meet the specific needs of customers

3D printing allows for small production runs which reduces the costs of a specific job production

which will increase profit margins for the business, leading to a higher margin of safety (reduced risk)

Question 20

look at Bar Gate Stock Graphs (2.3.2)

Question 21

maximum stock level

Answer 21

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

Question 22

reorder level

Answer 22

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

Question 23

minimum stock level

Answer 23

The minimum stock level is also known as the buffer stock level and is the lowest level to which a business is willing to allow stock levels to fall

Question 24

lead time

Answer 24

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

Question 25

5 Examples of Factors That Influence the Process of Sourcing raw Materials

Answer 25

quality
delivery
availability
trust
cost

Question 26

Just In Time stock management (JIT)

Answer 26

Just in Time (JIT) stock management is a process in which raw materials are not stored onsite but ordered as required and delivered by suppliers ‘just in time’ to be used

Question 27

pros of JIT (3)

Answer 27

• Removing buffer stock space (which would previously have been used for storage) means more space can be used for sales.
• Smaller but more frequent deliveries mean that the products will be fresher. A business can also have new stock delivered more frequently, eg: perishable items such as fresh fruit and vegetables.
• Businesses will no longer have large amounts of capital tied up in stock that could go out of date or out of fashion. This capital can then be reinvested or spent elsewhere.
• Additionally, having less stock that could go out of date will reduce waste, saving money. motivation is likely to be improved

Question 28

quality control

Answer 28

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

Question 29

quality control pros (1)

Answer 29

An inexpensive and simple way to check that output is fit for purpose

check bite size

Question 30

quality control cons (2)

Answer 30

The rejection of finished goods is a significant waste of resources

There is little focus on the cause of defects

Question 31

quality assurance

Answer 31

Inspecting the quality of production throughout the process

Question 32

quality assurance pros (3)

Answer 32

Quality issues are identified early so products may be reworked rather than rejected

The cause of defects is the focus so future quality issues may be prevented

Controlling quality throughout the production process can be expensive,
but it could ultimately reduce costs because defects do not then have to be dealt with

Question 33

quality assurance cons (2)

Answer 33

Staff training and a skilled workforce is required so labour costs may be increased

Reworking may lengthen the production process

Question 34

two methods of quality management

Answer 34

• quality control
• quality assurance

Question 35

sales process

Answer 35

The sales process is the set of steps that a company takes to deliver its product to customers

Question 36

stages of the sale process (5)

Answer 36

1. Gain Customer Interest
2. Provide a Speedy and Efficient Service
3. Engage the Customer
4. Provide Post-sales Service
5. Achieve Customer Loyalty

Question 37

3 methods of how a business develops customer loyalty

Answer 37

• customer service
• loyalty cards
• saver schemes