Understanding Operations objectives/scale resource mix

Question 1

What are three common objectives for operations?

Answer 1

Quality targets - can be considered “meeting the customer needs” can increase competitive. performance, predicted life or perceived quality
Cost targets - keeping costs to a minimum to allow for competitive pricing without having detrimental affects on quality or volume targets. often through waste reduction.
Volume targets - not only number of units a firm can sell but also its flexibility to respond to varying demand, if volume targets are high then economies of scale can appear

Question 2

Whats efficiency targets based on?

Answer 2

the gap between input, production and output, firms will maximise output and minimise input being more efficient

Question 3

Define operational objectives

Answer 3

Targets set in relation to the production process or provision of a service within a given financial year

Question 4

Whats economies of scale?

Answer 4

The benefits enjoyed by a firm as a result of operating on a large scale, leading to a fall in the average price

Question 5

What are the three types of economies of scale?

Answer 5

Purchasing - ability of large firms to buy in bulk and negotiate better terms with suppliers
Technical - Ability to invest in the most up to date and technologically advanced equipment as the cost is spread over a large number reducing average cost
Specialisation - Ability to employ specialists as a firm grows i.e. legal or IT specialists

Question 6

Whats diseconomies of scale?

Answer 6

Problems encountered when a firm grows beyond its optimum output level and hence average costs start to rise. often qualitative so hard to measure

Question 7

Name two diseconomies of scale?

Answer 7

Communication - as firms grow in size the efficiency and cost of communicating increases, also language barriers so sophisticated ways are invested in
Coordination - number of employees and resources grows it becomes hard to ensure all workers are working towards same objectives and efficiently

Question 8

Whats the resource mix?

Answer 8

The combo of capital and human resources utilised within a business to achieve the required output

Question 9

Whats the diff between capital and labour intensive?

Answer 9

Capital is where firms rely heavily on capital equipment whereas labour is firms that rely more heavily upon labour