Unit 4

Question 1

Intellectual capital

Answer 1

Intangible capital of a business that includes human capital (well trained, knowledgeable employees), structural capital (databases and information systems) and relational capital (good links with supplier and customer)

Question 2

Transformational process

Answer 2

An activity or group of activities that transforms one or more inputs, adds value to them, and produces output for customers

Question 3

Productivity

Answer 3

The ratio of inputs to outputs during production

E.G. output per worker per time period

Question 4

Level of production

Answer 4

The number of units produced during a period of time

Question 5

Production

Answer 5

Converting inputs to outputs

Question 6

Efficiency

Answer 6

Producing output at the highest ratio of output to input

Question 7

Effectiveness

Answer 7

Meeting the objectives of the enterprise by using inputs productively to meet customer needs

Question 8

Sustainability of operations

Answer 8

Business operations that can be maintained in the long term, for examples, by protecting the environment and not damaging the quality of life for future generations

Question 9

Labour intensive

Answer 9

Involving a high level of labour input compared with capital equipment

Question 10

Capital intensive

Answer 10

Involving a high quantity of capital equipment compared with labour input

Question 11

Job production

Answer 11

The production of a one-off item specially designed for the customer

Question 12

Batch production

Answer 12

The production of a limited number of identical products — each item in the batch passes through one stage of production before passing on to the next stage

Question 13

Flow production

Answer 13

The production of items in a continually moving process

Question 14

Mass customisation

Answer 14

The use of flexible computer-aided technology on production lines to make products that meet individual customer’s requirements for customised products

Question 15

Inventory (stock)

Answer 15

Materials and goods required to allow for the production and supply of products to the customer

Question 16

Inventory management

Answer 16

The process of ordering, storing and using a company’s inventory

Question 17

Economic order quantity

Answer 17

The optimum or least-cost quantity of stock to reorder taking into account delivery costs and stock holding costs

Question 18

Buffer inventory

Answer 18

Minimum inventory level that should be held to ensure that continuous production is possible should deliver delays occur or output increase

Question 19

Re-order quantity

Answer 19

Number of units ordered each time

Question 20

Lead time

Answer 20

The time between ordering new supplies and their delivery

Question 21

Re-order level

Answer 21

The level of inventory that triggers a new order to be sent to suppliers

Question 22

Supply chain

Answer 22

The network of businesses and activities involved in creating a product for sale, starting with the delivery of raw materials and finishing with delivery of the finished product

Question 23

Supply chain management

Answer 23

Handling the entire production flow of a product to minimise costs but improve customer service

Question 24

Just-in-time (JIT)

Answer 24

This inventory-control method aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order

Question 25

Just-in-case (JIC)

Answer 25

This method aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels

Question 26

Maximum capacity

Answer 26

The highest level of sustained output that can be achieved

Question 27

Capacity utilisation

Answer 27

The proportion of maximum output capacity currently being achieved

Question 28

Outsourcing

Answer 28

Using another business (a third party) to undertake a part of production process rather than doing it so the in the business using the firm’s own employees

Question 29

Excess capacity

Answer 29

This exists when the current levels of output are less than the full capacity output of a business

Question 30

Rationalisation

Answer 30

Reducing capacity by floating factories/unit of production

Question 31

Capacity shortage

Answer 31

When demand for a business’s product exceeds production capacity

Question 32

Business process outsourcing (BPO)

Answer 32

A form of outsourcing that uses specialist contractors to take responsibility for certain business functions

E.G. Human Resources and finance