topic 4 (operations) Flashcards
Operations management
the activities, decisions and responsibilities of managing production and delivery of products and services
Labour intensive
a relatively high proportion of labour in the production is used compared to equipment
Capital intensive
uses a relatively high proportion of capital equipment relative to labour.
operational objectives include:
- Costs
- Quality
- Speed of response and flexibility
- Dependability
- environmental objectives
- added value
profit=
sales revenue – (variable costs + fixed costs)
reducing cost per unit enables what
a low unit cost enables a business either to keep prices low for customers or to enjoy a higher profit margin
U can reducing variable costs per unit by
finding cheaper supplies
reducing fixed cost can occur when
when businesses have merged because they may have duplication of fixed costs
quality
those features of a product or service that allow it to satisfy customers
quality cab be measured by
Customer satisfaction ratings
Customer complaints
Dependability
businesses do not want to let customers down and so focus on ensuring that they meet promises- or are dependable
environmental object may include
- reducing waste
- reducing carbon footprint
- minimising waste products or materials
- increasing recycling
- achieving self-sufficiency in energy use.
added value
the difference between what a business spends to produce its goods or services, and the price that customers are prepared to pay.
external factors
CCPESTEL
consumer,competitor,political,environmental,social,
technological,economic,legislation
Internal influences on operational objectives
cooperate objectives
finance
human resources
the nature of product/service
labour productivity is
The amount (volume) of output that is obtained from each employee
labour productivity formula
output per period/ number of employees in that period
increasing labour productivity can be achieved by
- recruiting suitably skilled and trained employees
- training to improve skills and attitudes of existing
employees - using appropriate remuneration and non-financial
benefits to improve - improving working practiced
- improved technology and capital equipment
difficulties of improving labour productivity
training of existing staff may take longer
Employing new people with the appropriate skills can be costly and may also take time
unit costs =
total cost/ units of output
capacity is
The maximum total level of output or production that a business can produce in a given time period.
capacity utilisation is
The % of a firms total possible production level that’s being reached
capacity utilisation =
capacity output per annum(year)/ maximum posssible output per annum(year)
how to increase capacity
- invest in capital machinery
- invest in employees through training
- hire more employees
- Change production practices to be more efficient.
lean production
Aims to reduce all forms of waste in the production process
just in time production(JIT)
This involves reducing the stock holding of a business to make it more efficient.
benifts of JIT
- Reduced stock holding
- Smaller warehouses
- Less staff needed to manage and control stock
- Improved relationship with suppliers
- Less risk as stock will not perish or go out of date
drawbacks of JIT
- Production line could stop completely leaving staff
and machinery idle - Reliability of suppliers
- Reliability of raw materials
- Reduced options for responding to customer
demands
benifits of quailty
creates usp
impacts sales
impacts sellling price
pricing felixbility
frim reputation
quality controll
a system that uses inspections to check the quality of work at stages of the manufacturing process.
pros of quality control
Quality checks at the end can stop faulty goods reaching customers
Inspectors can spot common problems and out them right
cons of qaulity control
Does not encourage responsibility
Expensive to operate
Responsibility rests with inspectors, therefore staff take no responsibility, which could reduce motivation.
quality assurance
A system that improves quality by arranging every process to get products right the first time
pros of quality assurance
Workers take responsibility
Motivates workforce
Reduced costs because of less waste
Greater consistency of quality products because responsibility is spread throughout workforce.
cons
Needs a change in the culture of the organisation
Can take time to embed the system because of cultural change
Could increase costs in the short term
kaizen
A policy of implementing small, incremental changes in order to achieve better quality and greater efficiency
mass customisation
the personalisation or custom tailoring of goods or services to meet customer needs – but at near mass- production prices.
methods of increasing capcity
- Extending factories
- Overtime or longer hours
- Hiring new staff
- Flexible workforce
- Sub-contracting
methods of reducing capcity
- Sell of fixed assets
- Changing to shorter working weeks or days
- Laying of workers
- Transferring resources to other areas/locations
temporaty contract
A temporary contract is an employment contract that is for a fixed period or can be terminated easily by either party
stock control charts show
lead times
re-order levels
buffer level of inventory
re-order quanties
measure of reliability
the percentage of deliveries on time
how much the suppliers meet its terms of contract
vertical intergration
this is a method where businesses can guarantee the reliability, quality and flexibility of their suppliers as they buy their suppliers
