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Higher Business Management > Unit 3 - Operations > Flashcards

Unit 3 - Operations Flashcards

1
Q

What is Just In Time?

A

The business holds almost zero inventory.
Materials are order and products are assembled JUST IN TIME.
Must be a close relationship between manufacturer and supplier for it to work.

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2
Q

How are JIT figures calculated?

A

Nothing is produced unless customers are demanding the product.
Marketing department predicts the expected demand and figures
OR
The business waits until there is demand.

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3
Q

JIT advantages?

A

Capital is not tied up in stock so can be used elsewhere
More responsive to customer demand
Reduction in storage costs

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4
Q

JIT disadvantages?

A

Production is disrupted if products do not arrive on time.
High dependency on suppliers.
May lose bulk-buying discounts.
No room for error.

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5
Q

What is optimum stock level?

A

Storage costs are at a minimum level but there is enough inventory to meet requirements.

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6
Q

What could happen if a business understocks?

A

Production could stop
Customer complaints due to not receiving orders on time
Business could gain bad reputation

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7
Q

What could happen if a business overstocks?

A

Increased costs for security and storage
Waste of stock due to it becoming out of date
Higher risk of stock being stolen

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8
Q

What is the purpose of an inventory management system?

A

Ensure there is enough stock available when it is needed
Ensure production does not stop
Avoid stock deterioration

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9
Q

What is a lead time?

A

Time that passes between ordering stock and it arriving

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10
Q

What is re-order level?

A

The quantity at which more inventory is ordered.

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11
Q

What is maximum stock level?

A

The highest amount of inventory that can be stored

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12
Q

What is buffer inventory?

A

A safety supply of around 100 items that are held in case deliveries are delayed or there is an unexpected large order.

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13
Q

What is re-order quantity?

A

The quantity that is re-ordered to bring levels back to the maximum.

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14
Q

What is minimum stock level?

A

The lowest amount of stock that should be stored at one time.

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15
Q

What does the type of storage used by a business depend on?

A

The type of stock
Finance available for storage
Size and location of customers
Accessibility

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16
Q

What is centralised storage?

A

This involves storing inventory in 1 central location – a large warehouse.

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17
Q

What is decentralised storage?

A

This involves storing inventory in various locations within the organisation. Each branch or department is responsible for ordering and maintaining its own inventory. E.g. Tesco

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18
Q

What are advantages of centralised storage?

A

Can store large amounts, therefore can receive bulk buying orders

May be cheaper

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19
Q

What are disadvantages of centralised storage?

A

Specialist staff are hired so costs increase

The cost of a warehouse is high

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20
Q

What are advantages of decentralised storage?

A

Inventory is always close by when required

Smaller stores are more responsive to local needs

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21
Q

What are disadvantages of decentralised storage?

A

Can face consequences of under-stocking

Security isn’t as tight due to lack of specialist

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22
Q

What is logistical management?

A

How the product is transported and distributed from the manufacturing site to the customer/store.

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23
Q

What are examples of methods of distribution?

A

Road
Rail
Air
Sea

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24
Q

What is capital intensive?

A

Where the production process relies more on machinery and equipment than human input.

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25
Q

Capital intensive advantages?

A

Can work 24/7
Standardised quality
Fewer employees

26
Q

Capital intensive disadvantages?

A

Machinery/equipment is expensive

Breakdowns can cause production to stop and can be expensive

27
Q

What is labour intensive?

A

This is where a business uses a larger proportion of human input than machinery.

28
Q

Labour intensive advantages?

A

No expensive equipment

Unique products

29
Q

Labour intensive disadvantages?

A

Expensive and time consuming to recruit and train
Training takes time
Quality can vary (mistakes)

30
Q

What is batch production?

A

Capital intensive

Groups of identical products being made at one time

31
Q

What is flow production?

A

Capital intensive

Identical products being made along a production line
Continuous output or identical products

32
Q

What is job production?

A

Labour intensive

Company produces single product or small number of products to specific requirements

One job is finished before another is started

33
Q

What factors are considered when choosing a method of production?

A

The skills of the workforce

Finance available

Technology available

34
Q

What can capital intensive production either be?

A

Automation or mechanisation

35
Q

What is automation?

A

Refers to the production being fully automated, uses CAM (computer aided manufacture)

36
Q

What is mechanisation?

A

Refers to labour and machines working together on the production of a product.

37
Q

How do businesses ensure quality?

A

Using quality control or quality assurance methods

38
Q

What is quality control?

A

Where raw materials are inspected or finished goods are inspected to check that they are of an acceptable standard before sale

39
Q

What is quality assurance?

A

A method of prevention where products are checked for quality at different stages of the production process.

40
Q

Advantages of quality control?

A

Ensures no faulty goods are sent out to customers

Limits the potential for bad reputation

Cheap method of ensuring quality

41
Q

What are disadvantages of quality control?

A

Can create a lot of waste as products are not checked until they are made

Faulty products thrown away

42
Q

Quality assurance advantages?

A

Less wastage which reduces costs

Easy to identify where the faults are occurring on the production line

43
Q

Quality assurance disadvantages?

A

Can slow down production process due to all the checks

44
Q

What is benchmarking?

A

When a business compares its products with the best in the industry

The business will aim for these standards

45
Q

What are advantages of bench marking?

A

If successful, the product will be as good as the ‘best’ on the market

46
Q

What are disadvantages of benchmarking?

A

Can be difficult to gain competitors information

When the ‘best’ improves, the business will be left behind.

47
Q

What is quality circles?

A

When a group of employees meet to discuss problems in the production process

48
Q

What are advantages of quality circles?

A

Employees will be motivated as they have a say in the decision-making

49
Q

Disadvantages of quality circles?

A

Employees meet during a working day therefore production time is lost

Suggestions are not always feasible therefore time is wasted

50
Q

Advantages of ethical operations?

A

Attract customers who agree with the principles

Ensure the safety and welfare of employees and animals

Improves reputation

Can be awarded awards

51
Q

Disadvantages of ethical operations?

A

Decision making can be time consuming

Audits are needed to ensure standards are met and maintained

52
Q

What are examples of environmental operations?

A

Reducing waste
Recycling
Minimising packaging
Using low emission vehicles for deliveries/reducing carbon footprint.

53
Q

Advantages of ethical operations?

A

The business can gain a positive reputation

Awards can be awarded

Renewable energy can save money

54
Q

Disadvantages of environmental operations?

A

Investment in environmentally friendly measures will initially be expensive eg solar panels

Can be time consuming to change

55
Q

What technology can be used in operations?

A 
Barcodes
EPOS
Internet
Email
E-commerce 
etc
56
Q

What are advantages of technology?

A

Works faster than humans

Consistent quality and accurate

Reduces staffing costs

57
Q

What are disadvantages of technology?

A

Initial costs are high

Staff training is costly and requires regular updates

58
Q

Costs of CAD?

A

Initial cost is high

Staff need to be trained in how to use the software

59
Q

What are the benefits of CAD?

A

More accurate

Faster

60
Q

CAM costs?

A

High initial cost

Production will stop if anything breaks

61
Q

CAM benefits?

A

Improved efficiency

Improved accuracy

Predictable speed of production

Higher Business Management (6 decks)

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