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business > unit 4 > Flashcards

unit 4 Flashcards

1
Q

what is operations management

A

the management of processes relating to the way goods are produced

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2
Q

what is transformation process

A

what happens inside the business and where value is added

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3
Q

key types of operational objectives

A

cost and volume
quality
efficiency and flexibility
environmental

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4
Q

what is traditional measure of cost-effectiveness

A

unit cost

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5
Q

why is a business with lower unit cost stronger

A

offer lowest price
make higher profit margin

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6
Q

examples of cost volume objectives

A

unit cost per item
productivity & efficiency
number of items to produce

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7
Q

possible quality objectives

A

zero/defect rates
reliability (how often something goes wrong)
customer satisfaction
number of complaints
customer loyalty
percentage of on the delivery

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8
Q

efficiency & flexibility objectives

A

look how efficient the assets of the business are being utilised
measure how responsive the business can be to short-term or unexpected changes in demand

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9
Q

examples of efficiency & flexibility objectives

A

labour productivity (output per employee)
output per time period (potential output)
capacity utilisation (output actually being achieved)
order lead times (time between receiving and processing order)

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10
Q

examples of environmental objectives

A

use engird efficiently
packaging recycled
supplies Fromm sustainable sources

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11
Q

importance of innovation

A

putting new idea into action
described as ‘the commercially successful exploitation of ideas’

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12
Q

invention

A

formulation of new ideas for products or processes

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13
Q

inovation

A

practical application of new inventions into marketable products

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14
Q

product innovation

A

launching new or improved products on market

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15
Q

process innovation

A

finding better ways pf producing existing products

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16
Q

‘first mover advantage’

A

higher price/profit
added value
increase market share
enhanced reputation

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17
Q

benefits of process innovation

A

reduced costs
improved quality
higher profits
more customer service

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18
Q

internal influences on operational objectivos

A

finance
HR
marketing

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19
Q

external factors on operational objectives

A

PESTLE

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20
Q

average cost formula

A

total production costs/total output in period

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21
Q

why do economies of scale arise

A

when unit costs fall as output increases

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22
Q

internal economic scale

A

arise from increased output of the business itself

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23
Q

external economic scale

A

occur within an industry: i.e. all competitors benefit

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24
Q

what are internal economies of scale

A

purchasing economies
technical
marketing
network
financial

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25
Q

purchasing economies

A

buying on greater quantities usually results in a lower price (bulk)

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26
Q

technical

A

use of specialist equipment or processes to boost productivity (machines, IT)

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27
Q

marketing

A

spreading a fixed marketing spend over a larger range of products, markers and customers

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28
Q

network

A

adding extra customers or uses to a network that is already established (mobile phones, Netflix)

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29
Q

financial

A

larger firms benefit from access to more and cheaper finance - as they pose less risk

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30
Q

why does diseconomies of scale happen

A

this occurs when average costs rise when a business gets too big

coordination problems
communication problems
alienation and demotivation

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31
Q

what is labour intensive

A

production relies on using labour resources

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32
Q

what is capital intensive

A

production relies on using capital resources

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33
Q

examples of labour intensive

A

hotels & restaurants
hairdressing
fruit farming
coal mining

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34
Q

examples of capital intensive

A

oil extraction
car manufacturing
transport infrastructure

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35
Q

labour intensive unit cost

A
  • labour costs higher than capital costs
  • mainly variable = lower break even
    output
  • benefit if able to source low cost labour
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36
Q

capital intensive unit cost

A
  • cost higher than labour costs
  • mainly fixed = higher break even output
  • benefit if they can access low cost, long
    term finance
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37
Q

benefits of capital intensity

A
  • better opportunities for economies of
    scale
  • much better productivity
  • better quality
  • quicker
  • lower labour costs
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38
Q

disadvantages of capital intensity

A
  • significant investment
  • might lose competitiveness due to not
    being needed (obsolescence)
  • may generate resistance to change from
    labour force
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39
Q

benefits of labour intensity

A
  • unit costs may be low in wage locations
  • labour is flexible resource - through
    multi-skilling and training
  • labour at the heart of the production
    process - can help continuous
    improvement
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40
Q

disadvantages of labour intensity

A
  • greater risk of problems with
    employee/employer relationship
  • potentially high costs of labour turnover
  • need for continuous investment in
    training
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41
Q

what does capacity mean

A

a measure of how much output it can achieve in a given period

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42
Q

examples of capacity

A
  • a football stadium
  • call centre how many calls a day
  • fast food people served per hour
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43
Q

why can capacity change

A
  • machine is having maintenance,
    capacity reduced
  • linked to labour, working more hours
    more output
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44
Q

what other factor does capacity need to account

A
  • seasons
  • chocolate eggs
  • ice creams
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45
Q

what does capacity utilisation mean

A

percentage of a business capacity that is actually being used over a specific time

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46
Q

calculation for capacity utilisation

A

potential possible output

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47
Q

why is capacity utilisation matters

A
  • useful measure of productive efficiency since it
    measures wether if they are unused
  • higher utilisation reduces unit cost
  • high level of capacity needed if business has high
    breakeven output due to fixed costs
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48
Q

key costs of capacity

A

-equipment
- facilities
- labour

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49
Q

reasons most businesses operate below capacity and why

A
  • lower ten expected market demand (change in
    taste)
  • loss of market share (competitors gain customers)
  • seasonal variation in demand (weather changes)
  • recent increase in capacity (new production
    added)
  • maintenance and repair programmes (capacity
    temporarily unavailable)
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50
Q

dangers of operation at low capacity utilisation

A
  • high unit costs - impact on competitiveness
  • less likely to reach break even output
  • capital tied up in underutilised assets
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51
Q

can a business work at more then 100% capacity utilisation and why

A
  • possible in short term
  • increase workforce hours
  • sub-contract some production activities
  • reduce time spent maintain production
    equipment
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52
Q

problems with working at high capacity

A
  • negative effect on quality
  • employees suffer
  • loss of sales
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53
Q

what is better high or low capacity

A

high as its better efficiency

54
Q

why is flexibility of capacity important

A

ability to adjust to meet changes in demand

55
Q

what is labour productivity

A

the output per employee

56
Q

labour productivity formula

A

no. of employees

57
Q

why is labour productivity important

A

significant cost of production

58
Q

what does labour productivity help reduce

A

unit cost

59
Q

why is labour productivity good for competition

A

competitive advantage as it allows lower prices

60
Q

definition of quality

A

product or service is of good quality if it meets the needs & expectations of the customer

61
Q

some measures of qualities that are tangible

A
  • reliability
  • functions & features
  • support levels & standards
  • cost of ownership (repairs)
62
Q

some measures of qualities that are intangible

A
  • brand image
  • exclusiveness
  • market reputation
63
Q

why is quality important in a business

A
  • markets are highly competitive: due to
    customers being more knowledgeable
    & demanding
  • prepared to complain about quality
    able to share quality art poor food
64
Q

business benefits of greater quality

A
  • customer satisfaction
  • repeat purchase
  • customer recommendation
  • lower marketing costs
  • higher customer loyalty
65
Q

what does quality include other then the product itself

A
  • customer experience
  • buying process
  • product reliability
  • cost of ownership
66
Q

how would you judge the quality of a restaurant

A
  • service
  • food
  • ambience
67
Q

examples of poor quality

A
  • produc fails
  • product doesn’t perform as promised
  • product delivered late
  • poor instructions
  • unresponsive customer service
68
Q

what are the costs of poor quality to a business

A
  • lose customers
  • remaking product
  • replace product
  • wasted materials
69
Q

how might good/poor quality be measured

A
  • customer service ratings
  • product returns
  • warranty claims
  • waste levels in production
  • levels of repeat nosiness
  • market surveys
  • profit margin
70
Q

methods of improving quality

A
  • training and motivating
  • understanding customers expectation
  • use technology
  • work closely with suppliers
  • quality control
  • quality insurance
71
Q

advantages of quality control

A
  • can be monitored
  • stops faulty products going to customer
  • problems are identified
  • inspector takes responsibility
72
Q

disadvantages of quality control

A
  • takes responsibility away from operatives
  • requires specialist/additional personnel
  • problems only identified at end of process
  • scale waste levels may be high
73
Q

what is quality control

A

process through which a business seeks to ensure that product quality is maintained or improved

74
Q

what is quality assurance

A

checking of product or service at each stage of its production (as it travels along a production line

75
Q

advantages of quality assurance

A
  • spots any faults early saving resources to not be
    wasted
  • motivates workers
  • aims to achieve an objective of 0 defects
    -enhance reputation
76
Q

disadvantages of quality assurance

A
  • requires staff training
  • slow down production process +
    labour
  • can lead to higher costs
  • demotivate workers
77
Q

what is a supplier

A

a business or individual that provides goods and services to another business

78
Q

what is a supply chain

A

network between a company and its suppliers to produce and distribute a specific product
(steps it goes through to get to consumer)

79
Q

why are suppliers important

A
  • suppliers determine many of the costs
  • closely linked to product quality
  • important source of finance to a
    business
  • firms that use lean production
    techniques need relationships
80
Q

what characteristic would make an effective supplier

A
  • good value for money
  • good quality
  • are they reliable
  • good communication
  • are they financially secure
  • can they handle your capacity
81
Q

how can supplier influences performance

A
  • lower purchase costs
  • better quality
  • improved customer service
  • increased productivity
  • more flexible capacity
82
Q

what is trade credit

A

firm buys goods and services from a supplier and pays for them later

83
Q

definition of inventory

A

raw materials, work-in-progress and finished goods held by a firm

84
Q

three main types of inventory

A
  • raw materials & components
  • work in progress
  • finished goods
85
Q

what are raw materials & components

A
  • bought from suppliers
  • used in production process
  • (parts/ingredients)
86
Q

what is work in progress

A
  • semi or part-finished production
  • (construction projects)
87
Q

what are finished goods

A
  • completed products ready for sale or
    distribution
  • (products on shop shelves, goods in
    warehouse)
88
Q

key reasons to hold inventory

A
  • satisfy customer demand
  • allow efficient production
  • allow for seasonal changes
  • precaution against delays
  • enable production
89
Q

main influences on amount of inventory held

A
  • satisfy demand
  • need to manage working capital
  • risk of inventory losing value
90
Q

costs of holding inventories

A
  • cost of storage
  • interest costs
  • obsolescence risk
  • stockout costs
91
Q

why use inventory control charts

A

overall objective of inventory control is to maintain inventory levels to that the total costs of holding inventories is minimised

92
Q

key parts of an inventory control chart

A
  • maximum level
  • re-order level
  • lead time
  • minimum inventory level
  • buffer stock
93
Q

factors affecting when/how much inventory to re-order

A
  • lead time from the supplier
  • implications of running out
  • demand for the product
94
Q

advantages of low inventory levels

A
  • holding costs
  • lower risk of obsolescence
  • consistent with operating ‘lean’
95
Q

advantages of high inventory levels

A
  • fully supplied - no delays
  • handle unexpected changes in demand or need for higher output
  • less likely of out of stock
96
Q

concept of just in time

A
  • inventory required for production
    arrives just as it is needed
  • lean production = minimal capital tied
    up in inventories
97
Q

implications

A
  • no need for buffer stocks
  • stock holding costs are minimised
  • lead times are very short
  • highly reliable suppliers, IT systems
98
Q

importance of reducing waste cost

A

less waste means lower costs, which is an essential part of any business being competitive

99
Q

what is over-production

A

making more than is needed - leads to excess stocks

100
Q

what is waiting time

A

equipment + people standing idle waiting for. production process to be completed or resources to arrive

101
Q

what is transport

A

moving resources (people, materials) around unnecessarily

102
Q

what is stocks

A

often held as an acceptable buffer, but shouldn’t be excessive

103
Q

what is motion

A

a worker who appears busy but is not actually adding any value

104
Q

what is defects

A

output that doesn’t reach the required quality standard - often a significant cost to an uncompetitive business

105
Q

what is time based management

A

time-based management is a general approach that recognises the importance of time and seeks to reduce the level of wasted time in the production process

106
Q

what is simultaneous engineering

A

a project management approach that helps business develop an launch new products more quickly. all of the areas involved in a project are planned together (IT+ marketing). everything os considered simultaneously rather then separately

107
Q

what is cell production

A

form of team working where production processes are split into cells. each cell is responsible for a complete unit of work which they then pass onto the next stage creating internal customers and supplier team peking where production processes

108
Q

what is just-in-time

A

JIT aims ensure that inputs into the production process only arrive when they are needed. implemented successfully, stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum

109
Q

what is lean production

A

organising production and operations to minimise waste

110
Q

what is cell production

A

form of team working that helps ensure worker commitment, as each cell is responsible for a complete unit of work

111
Q

what is JIT

A

JIT a manufacturing system I which materials or components are delivered immediately before they are required in production

112
Q

what reward do you get for land

A

rent

113
Q

what reward do you get for labour

A

wages

114
Q

what reward do you get for capital

A

intrest

115
Q

what reward do you get for enterprise

A

profit

116
Q

what is capital intensive

A

uses machinery in production

117
Q

what is labour intensive

A

uses high proportion of labour (tertiary sector)

118
Q

advantages of capital intensive

A
  • increased productivity
  • improved quality and
    speed
  • reduced labour costs
  • economies of scale
119
Q

disadvantages of capital intensive

A
  • high investment outlay
  • lack of human initiative
  • greater resistance to
    change by workforce
120
Q

advantages of labour insensitive

A
  • cheaper, low wage
    locations
  • workforce can adapt to
    change
  • improvement through
    workforce
  • government funding to
    protect jobs
121
Q

disadvantages of labour insensitive

A
  • industrial relations can
    be a problem (strikes)
  • lack of skilled workers in
    some industries
  • HRM costs can be high
    (recruitment, selection,
    training)
122
Q

what is outsourcing

A

practise of using the services of other organisation to complete all or parts of the manufacturing process

123
Q

what are the values of outsourcing

A
  • provides flexibility in supply
  • increase capacity without high capital
    expenditure
  • can buy in expertise
124
Q

what are temporary employees

A

contacted to work for a business for a specified period of time

125
Q

what are part time employees

A

contracted to work less hours than a full time employee

126
Q

benefits of using temporary and part time workers

A
  • flexible work force
  • better able to match supply to
    demand
  • not tied into paying workers when
    they aren’t being used to full potential
127
Q

issues with temporary and part time workers

A
  • recruitment+training costs are high
  • may be transient
  • may lack commitment
128
Q

what will the amount of stock held will depend upon

A
  • the business’ attitude to risk
  • importance of speed of response as
    an operational objective
  • speed of change within the market
  • nature of the product (perishable)
129
Q

what does flexibility mean

A
  • ability to respond to change
  • meet increase/decrease in demand
  • seasonal/fashion
130
Q

how can flexibility be improved

A
  • managing inventory and supply chain
    management
  • good relationship with suppliers
  • JIT operations
  • technology to quickly re-order levels
131
Q

what is mass customisation

A
  • offering individual tailored goods or
    services to customers on a large scale

business (14 decks)

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