Topic 4 - Decision Making To Inprove Operational Performance

Question 1

What is operation managements

Answer 1

It refers to the administration of business practice to create the highest level of efficient possible with an organization

Question 2

What are the keys of operations management

Answer 2

Capacity of the factory
Costs
Quality

Question 3

What are the key operational objectives

Answer 3

Cost
Volume
Quality
Time
Flexibility
Dependability
Environmental
Added value

Question 4

What is it valuable for a business to set clear operational objectives

Answer 4

Can help a company achieve its overall corporate objectives
Helps coordination between functional areas
Performance can be reviewed and assed
Motivation

Question 5

What are the 4 internal influences

Answer 5

1.the nature of product e.g tech firm might focus on innovation targets
2.availability of resources e.g output targets might be limited by the resources
3. Other departments/functions areas Eg marketing
4. Overall company objectives Eg if the company is focused on the environment

Question 6

What does external influence include ?

Answer 6

Competitions performance
Market conditions
Demand for the products
Changing customer needs
New technology

Question 7

What is productivity

Answer 7

Labour productivity is a measure of efficiency
It measures the output of a firm in relation to labour inputs
It is the output per worker time period (hour,month or year)

Question 8

How to work out productivity

Answer 8

There is 20 employers produce 40 tables per week at a furniture company.what is the labour productivity?
Total output / member of employees
40/20

Question 9

What is efficiency

Answer 9

Labour productivity is a key aspects of efficiency.
Producing as quickly as possible -(productivity)
With the least possible waste materials
Using the lowest possible amount of energy
Causing the lowest possible pollution

Question 10

Who to improve efficiency

Answer 10

Division of Labour
Down time reduction
Reduce wastage
Better communication
Training
Investment in capital

Question 11

Why is productivity important

Answer 11

It’s very important measure of a firms performance
It has a direct impact on the cost of producing a unit of output

Question 12

What is the formulae for Labour productivity

Answer 12

Output per period / number of employees
Eg a factory employs 90 workers to produce 9000 tvs per week
900/90 a=100 tvs per week

Question 13

How can a business increase Labour productivity

Answer 13

Increase investment in modern equipment/technology
Improve the ability/skills of those at work
Improve employee motivation

Question 14

What is the problems with increasing productivity

Answer 14

Very expensive Eg new tech
More productive workers may result in redundancies and lower morale

Question 15

Overall

Answer 15

Business will base their decision about Labour productivity on the value added and efficiency

Question 16

What is the importance of unit cost in operation

Answer 16

A key measurement of operational performance is ….
Unit cost is the average cost of producing one unit of output
The formula is
Unit cost = total cost /number of units

Question 17

What is the formula for fixed costs

Answer 17

Total fixed cost / number of units

Question 18

What is the formulae for unit costs

Answer 18

Total costs / number of units

Question 19

What is the meaning of efficiency

Answer 19

It measures how well inputs (people or machines) are used to generate output (result)
If a process becomes more efficient it uses fewer inputs to produce a given output and the unit costs should fall

Question 20

How can efficiency be improved

Answer 20

Increasing capacity utilization to spread fixed costs
Choosing the optimal mix of resources
Increasing Labour productivity
Using tech

Question 21

What is capacity utilisation

Answer 21

It’s the measure of the extent to which the productive capacity of a business is being used can be defined as
The percentage of total capacity that is actually being achieved in a given period

Question 22

What is the capacity utilization formula

Answer 22

Actual level of output /maximum possible output X 100

Question 23

What are the concerns with operating at 100% capacity

Answer 23

It demand rises further you will have to turn customer away
You will struggle to service machinery and train/retrain staff

Question 24

How could a firm with high capacity utilization of increase their capacity

Answer 24

Buy more machines
Increase productivity
I’m so facilities/resources more days: times during the working week

Question 25

How to get towards full capacity utilization/or deal with under utilization

Answer 25

1.increasing demand meaning price cutting
2. Cut capacity meaning it makes some staff redundant

Question 26

What does rationalization mean

Answer 26

Reorganizing a business to increase efficiency.This often implies cutting capacity to increase the percentage of utilization

Question 27

What is Labour productivity

Answer 27

Is a measure of efficiency
It measures the output of a firm in relation. To Labour inputs
It is the output per worker time period like hour month or year

Question 28

What is the formula for Labour productivity

Answer 28

Labour productivity = output per period/number of employees

Question 29

Labour productivity vs Labour costs per unit

Answer 29

If Labour productivity has higher output per employee this means that Labour costs per unit will have a lower Labour costs per unit

Question 30

Increasing Labour productivity means …

Answer 30

Invest in technology
Improve training
Change the way work is organized
Change the way employees are rewarded

Question 31

Difficulties in increasing Labour productivity means

Answer 31

Unintended consequences meaning lower quality/customer service
Resistance from employees-fear of loosing jobs
Employees demanding higher pay-performance linked to productivity

Question 32

Key points Labour intensive

Answer 32

Labour intensive production can provide an opportunity for small firms
Some people will demand and will always be able to afford unique products Eg a made to measure dress

Question 33

What is the Labour intensive production like

Answer 33

They are a high proportion of total costs.Unit costs likely to be high
Low financial barriers to entry meaning it’s cheap to start up production
Management focus on the cost of Labour (possibly switch production to low cost countries)
Highly flexible- makes it possible for a small firm to compete without competition from large ones

Question 34

Capital intensive production

Answer 34

Large % of TC tied up in the fixed costs of purchasing and operating machinery
High financial barristers to entry
-Can be inflexible difficult to switch products or to tailor products to individual customers needs
+ unit cost likely to be low in comparison

Question 35

What are the 3 main targets in operations managers

Answer 35

1. quality targets
2. Capacity utilization targets
   3.unit cost targets (linked to productivity)

Question 36

What is the definition of quality product

Answer 36

A product or service that’s meets customers expectation and is there fit for purpose

Question 37

What is the definition of quality standards

Answer 37

The expectation of customers expressed in terms of the minimum acceptable production or service standards

Question 38

How can quality help determine a firms success?

Answer 38

Customer loyalty
Strong brand name
Retailers want to stock the product
Fewer returns and replacements lead to reduced costs
These points can each help support the marketing function in a business res