Unit 3.4 Flashcards

1
Q

Operational efficiency

A

measure of how many costs are incurred during production
Lower costs = Greater efficiency

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2
Q

Productivity

A

output per employee in a given time period

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3
Q

Average unit cost

A

Average cost of producing one item

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4
Q

Production at minimum average cost

A
  • Efficiency maximised when goods produced at the minimum unit cost
  • Production aim’s to operate at minimum average cost per unit - business can therefore take advantage of economies of scale
  • The more products produced = lower unit cost
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5
Q

Capacity

A

maximum possible output of the business
- Capacity under-utilisation = not producing maximum possible output
- Capacity over-utilisation = Producing over the maximum possible output

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6
Q

Capacity utilisation

A

extent to which a business uses it’s maximum production capacitys

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7
Q

Uses of operational data

A
  • Monitor and react to issues in production
  • Speed up operations by showing where the problem areas are
  • Improve reliability and quality
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8
Q

Effects of under - utilisation

A
  • higher fixed costs per unit
  • unmotivated staff
  • may lead to redundancies and the sale of asset’s

Pros
- increases flexibility of the business

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9
Q

Effects of over utilisation

A
  • Too much strain on resources
  • Staff are overworked = make more mistakes
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10
Q

Productivity bonus

A

used to boost productivity of employees as it gives them a financial incentive to increase production
- however this will increase costs of the business may result in reduction in efficiency

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11
Q

Productivity deal

A

Trade union may organise this for the staff of a business - motivates employees to work harder - still uses financial bonuses

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12
Q

Staff training

A
  • better trained = more productive - however training can be expensive and other employees may be involved in the training process = lower productivity
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13
Q

Investing in new machinery and equipment

A
  • makes the business more efficient with more goods being produced - however new machinery is very expensive meaning it may take years before a positive result can be seen
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14
Q

Factors influencing productivity

A
  • Quality if inputs = faulty parts can stop the production line and thus lose the company money
  • Having enough staff - stretched employees are demotivated
  • Investment into new technology - robots can work 24/7
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15
Q

Link between productivity and competitiveness

A
  • business = more productive = then it is more economically efficient
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16
Q

Operational objectives

A
  • costs
  • quality
  • Speed of response
  • dependability
  • environmental
  • added value
17
Q

Quality

A

How well a product or service does what it was designed to do

18
Q

Quality assurance

A

how a businesses minimises the chances of poor quality products being produced
- quality is in every step of the production line - every worker is responsible for quality
- prevents faulty products from getting to the end of the production line
- classed as proactive

19
Q

Quality control

A
  • Checks the quality of the product at the end of the production line
  • classed as reactive
20
Q

Flexibility

A

Ability to adapt to gain a competitive advantage over rivals
Pros:
- Helps meet customer expectation
- Stays ahead of competition

21
Q

Mass Customisation

A

business can bespoke products on a massive scale with rapid low cost production methods e.g. Nike introduced mass customisation in 1999
Pros:
- More competitive
- Charge premium prices
Cons:
- High initial investment

22
Q

Speed of response

A

how well a member of staff responds to a customer or ow quickly an item is shipped etc

23
Q

Dependability

A

Cheaper for businesses to keep existing customers compared to attracting new ones

24
Q

Outsourcing

A

Part of the business is contracted out to a third party business to complete work - 1/5 of Europe’s cars are assembled in Eastern Europe

25
Outsourcing - Payroll
- Includes payment of wages, taxes, national insurance etc - can be beyond the skills of many self-employed business owners - Most common task to be outsourced
26
Outsourcing - IT
Hiring IT staff and training can be costly - by outsourcing the businesses can obtain the latest technology and skilled staff
27
Outsourcing - Delivery
Larger businesses may contract major delivery firms rather than maintaining their own fleet of lorries etc
28
Part - time work
Works less than 35 hours per week - should still get the same benefits of a full time worker
29
Part - time work - Pros
- Keeps costs down - Attract a wide pool of applicants with experience and skills - Flexible = respond to seasonal changes
30
Part - time work - Cons
- Employees might not be committed and loyal to the business - Employees may work more than one job which makes them inflexible
31
Use of Temporary and Part-time employees
Helps businesses meet changes in demand especially over seasonal periods - can be employed directly by the business or by an agency
32
Temporary work - Pros
- Useful to meet seasonal demands - Agencies may complete all the paperwork
33
Temporary work - Cons
- Agency staff can be expensive - Injury rates are higher due to less training
34
Production to order
A one-off product is produced for a customer Allows for... - Higher prices to be charged - Competitive advantage = USP However... - Hard to plan production time etc - Depends on the capacity of the business
35
Pros and Cons of moving a call centre to India
-- PROS -- - Cheaper labour - Existing infrastructure - Speak English -- CONS -- - Workers exploited - Still a language barrier - Loss of jobs in UK etc
36
Lead time
time taken between order and deliveries of a product
37
Buffer level
Level of stock between 0 and lead time