Unit 3 - Operations Flashcards
What is Just In Time?
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.
How are JIT figures calculated?
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.
JIT advantages?
Capital is not tied up in stock so can be used elsewhere
More responsive to customer demand
Reduction in storage costs
JIT disadvantages?
Production is disrupted if products do not arrive on time.
High dependency on suppliers.
May lose bulk-buying discounts.
No room for error.
What is optimum stock level?
Storage costs are at a minimum level but there is enough inventory to meet requirements.
What could happen if a business understocks?
Production could stop
Customer complaints due to not receiving orders on time
Business could gain bad reputation
What could happen if a business overstocks?
Increased costs for security and storage
Waste of stock due to it becoming out of date
Higher risk of stock being stolen
What is the purpose of an inventory management system?
Ensure there is enough stock available when it is needed
Ensure production does not stop
Avoid stock deterioration
What is a lead time?
Time that passes between ordering stock and it arriving
What is re-order level?
The quantity at which more inventory is ordered.
What is maximum stock level?
The highest amount of inventory that can be stored
What is buffer inventory?
A safety supply of around 100 items that are held in case deliveries are delayed or there is an unexpected large order.
What is re-order quantity?
The quantity that is re-ordered to bring levels back to the maximum.
What is minimum stock level?
The lowest amount of stock that should be stored at one time.
What does the type of storage used by a business depend on?
The type of stock
Finance available for storage
Size and location of customers
Accessibility
What is centralised storage?
This involves storing inventory in 1 central location – a large warehouse.
What is decentralised storage?
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
What are advantages of centralised storage?
Can store large amounts, therefore can receive bulk buying orders
May be cheaper
What are disadvantages of centralised storage?
Specialist staff are hired so costs increase
The cost of a warehouse is high
What are advantages of decentralised storage?
Inventory is always close by when required
Smaller stores are more responsive to local needs
What are disadvantages of decentralised storage?
Can face consequences of under-stocking
Security isn’t as tight due to lack of specialist
What is logistical management?
How the product is transported and distributed from the manufacturing site to the customer/store.
What are examples of methods of distribution?
Road
Rail
Air
Sea
What is capital intensive?
Where the production process relies more on machinery and equipment than human input.
Capital intensive advantages?
Can work 24/7
Standardised quality
Fewer employees
Capital intensive disadvantages?
Machinery/equipment is expensive
Breakdowns can cause production to stop and can be expensive
What is labour intensive?
This is where a business uses a larger proportion of human input than machinery.
Labour intensive advantages?
No expensive equipment
Unique products
Labour intensive disadvantages?
Expensive and time consuming to recruit and train
Training takes time
Quality can vary (mistakes)
What is batch production?
Capital intensive
Groups of identical products being made at one time
What is flow production?
Capital intensive
Identical products being made along a production line
Continuous output or identical products
What is job production?
Labour intensive
Company produces single product or small number of products to specific requirements
One job is finished before another is started
What factors are considered when choosing a method of production?
The skills of the workforce
Finance available
Technology available
What can capital intensive production either be?
Automation or mechanisation
What is automation?
Refers to the production being fully automated, uses CAM (computer aided manufacture)
What is mechanisation?
Refers to labour and machines working together on the production of a product.
How do businesses ensure quality?
Using quality control or quality assurance methods
What is quality control?
Where raw materials are inspected or finished goods are inspected to check that they are of an acceptable standard before sale
What is quality assurance?
A method of prevention where products are checked for quality at different stages of the production process.
Advantages of quality control?
Ensures no faulty goods are sent out to customers
Limits the potential for bad reputation
Cheap method of ensuring quality
What are disadvantages of quality control?
Can create a lot of waste as products are not checked until they are made
Faulty products thrown away
Quality assurance advantages?
Less wastage which reduces costs
Easy to identify where the faults are occurring on the production line
Quality assurance disadvantages?
Can slow down production process due to all the checks
What is benchmarking?
When a business compares its products with the best in the industry
The business will aim for these standards
What are advantages of bench marking?
If successful, the product will be as good as the ‘best’ on the market
What are disadvantages of benchmarking?
Can be difficult to gain competitors information
When the ‘best’ improves, the business will be left behind.
What is quality circles?
When a group of employees meet to discuss problems in the production process
What are advantages of quality circles?
Employees will be motivated as they have a say in the decision-making
Disadvantages of quality circles?
Employees meet during a working day therefore production time is lost
Suggestions are not always feasible therefore time is wasted
Advantages of ethical operations?
Attract customers who agree with the principles
Ensure the safety and welfare of employees and animals
Improves reputation
Can be awarded awards
Disadvantages of ethical operations?
Decision making can be time consuming
Audits are needed to ensure standards are met and maintained
What are examples of environmental operations?
Reducing waste
Recycling
Minimising packaging
Using low emission vehicles for deliveries/reducing carbon footprint.
Advantages of ethical operations?
The business can gain a positive reputation
Awards can be awarded
Renewable energy can save money
Disadvantages of environmental operations?
Investment in environmentally friendly measures will initially be expensive eg solar panels
Can be time consuming to change
What technology can be used in operations?
Barcodes EPOS Internet Email E-commerce etc
What are advantages of technology?
Works faster than humans
Consistent quality and accurate
Reduces staffing costs
What are disadvantages of technology?
Initial costs are high
Staff training is costly and requires regular updates
Costs of CAD?
Initial cost is high
Staff need to be trained in how to use the software
What are the benefits of CAD?
More accurate
Faster
CAM costs?
High initial cost
Production will stop if anything breaks
CAM benefits?
Improved efficiency
Improved accuracy
Predictable speed of production
