Topic 2.3 - Making Operational Decisions Flashcards
production
the transformation of resources (e.g. raw materials components and processes) into finished goods or services
3 methods of production
- job
- flow
- batch
bespoke
a product that is specifically tailored to the needs of an individual client
job production
Manufacturers (humans) produce one product at a time as ordered by the customer
pros of Job Production (2)
High quality product
highly skilled workers
Customised products can be produced (can demand a higher cost)
job production cons (2)
Production is slow
Labour costs are high
flow production
Continuous manufacturing of standardised products, usually on a production line
flow production pros (3)
Low unit costs due to economies of scale
Rapid production
Usually highly automated (capital intensive)
capital intensive
The term “capital intensive” refers to business processes or industries that require large amounts of investment to produce a good or service.
cons of flow production (2)
Customisation is difficult/ products are typically all the same
Capital equipment can be expensive to purchase
batch production
Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins
batch production pros (2)
Able to make a variety of sizes or flavours
Can be partially automated
batch production cons (2)
Not as flexible regarding customers’ tastes as job production
As batch production is not fully automated, costs may be higher than in flow production
Unit cost
The total cost of producing one unit of output.
Flexibility in production
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)
Explain one Impact of New Technology on Production Costs (2)
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
Explain one Impact of 3D printing on Production Productivity (3)
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
Explain one Impact of New Technology on Production Quality (3)
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
Explain one Impact of New Technology on Production Flexibility (3)
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)
look at Bar Gate Stock Graphs (2.3.2)
maximum stock level
The maximum stock level is the maximum amount of stock a business is able to hold in normal circumstances
reorder level
The reorder level is the level at which a business places a new order with its supplier
minimum stock level
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
lead time
The lead time is the length of time from the point of stock being ordered from the supplier to it being delivered
5 Examples of Factors That Influence the Process of Sourcing raw Materials
quality
delivery
availability
trust
cost
Just In Time stock management (JIT)
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
pros of JIT (3)
- 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
quality control
Inspecting the quality of output at the end of the production process
quality control pros (1)
An inexpensive and simple way to check that output is fit for purpose
check bite size
quality control cons (2)
The rejection of finished goods is a significant waste of resources
There is little focus on the cause of defects
quality assurance
Inspecting the quality of production throughout the process
quality assurance pros (3)
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
quality assurance cons (2)
Staff training and a skilled workforce is required so labour costs may be increased
Reworking may lengthen the production process
two methods of quality management
- quality control
- quality assurance
sales process
The sales process is the set of steps that a company takes to deliver its product to customers
stages of the sale process (5)
- Gain Customer Interest
- Provide a Speedy and Efficient Service
- Engage the Customer
- Provide Post-sales Service
- Achieve Customer Loyalty
3 methods of how a business develops customer loyalty
- customer service
- loyalty cards
- saver schemes
