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buisness > unit 4 > Flashcards

unit 4 Flashcards

1
Q

what is operations management

A

the management of processes, activities and decisions relating to the way goods and services are produced and delivered

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2
Q

what is the transformation process

A

where value is added

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3
Q

what are the key types of operational objectives

A

profit
quality
efficiency+flexibility
environmental

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4
Q

equation for unit cost

A

total costs/total units

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5
Q

examples of cost and volume objectives

A

productivity and efficiency

units costs per item

contribution per unit

number of items to produce (per time period, or per machine)

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6
Q

what is a benefit of a business developing a reputation for high quality

A

creates an advantage over its competitors

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7
Q

what are some examples of possible business objectives

A

0 defect rates
reliability
customer loyalty

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8
Q

examples of efficiency and flexibility objectives

A

labour productivity

output per time period

capacity utilisation

order lead times

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9
Q

examples of environmental objectives

A

use of energy efficiency

proportion of production or packaging materials that are recycled

compliance with waste disposal regulation

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10
Q

what is the difference between invention and innovation

A

invention is the formulation of new ideas for products or processes where’s innovation is practical application of new inventions into marketable products or services

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11
Q

what are the types of innovation

A

product innovation- launching new or improved products on to the market

process innovation- finding better or more efficient ways of producing existing products, or delivering existing services.

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12
Q

what are the benefits of process innovation

A

reduced costs
improved quality
more responsive customer service
greater flexibility
higher profits

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13
Q

what are corporate objectives

A

the most important internal influence and should not conflict

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14
Q

what is finance

A

The financial position of the business directly affects the choices available

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15
Q

what is Human Resources

A

the quality and capacity of the workforce is a key factor in affecting operational objectives- the level of training provided

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16
Q

what are marketing issues in relation to operational objectives

A

The nature of the product determines the operational set-up. Regular changes to the marketing mix- particularly product-may place strains on operations, particularly if production is relatively inflexible

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17
Q

average cost per unit calc

A

total production cost in period/total output in period

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18
Q

why do economies of scale arise

A

when units costs fall as output increases

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19
Q

what is purchasing economies in internal economies of scale

A

Buying in greater quantities usually results in a lower price

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20
Q

what is technical internal economies of scale

A

Use of specialist equipment or precesses to boost productivity

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21
Q

what is marketing in relation to internal economies of scale

A

spreading a fixed marketing spread over a larger range of products, markets and customers

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22
Q

what is network in relation to internal economies of scale

A

Adding extra customers or users to a network that is already established

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23
Q

what is financial in relation to internal economies of scale

A

Larger firms benefit from access to more cheaper finance- as they pose less risk.

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24
Q

what are examples of external economies of scale

A

University research department helping to fund research

Transport networks lower logistics cost

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25
Q

What are diseconomies of scale

A

occurs when average costs rise when a business gets too big. Occurs due to coordination problems, communication problems and alienation and demotivation of staff.

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26
Q

what is labour intensive

A

Production relies on using labour resources e.g hairdressing

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27
Q

what is capital intensive

A

production relies on using capital resources e.g car manufacturing

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28
Q

benefits and drawbacks of capital intensity

A

+ greater opportunities for economies of scale

+ potential for significantly better productivity

+ better quality + speed

+lower labour cost

  • significant investment
  • potential for loss of competitiveness due to obsolescence
  • May generate resistance to change from labour force
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29
Q

benefits and drawbacks of labour intensity

A

+ cost lower

+labour is a flexible resource- through multi-skilling and training

+ Labour at the heart of the production process- can help continuous improvement

  • greater risk of problems

-potentially high cost of labour turnover

  • Need for continuous investment in training
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30
Q

what is TQM

A

A core definition of total quality management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.

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31
Q

what is capacity

A

the capacity of a business is a measure of how much output it can achieve in a given period

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32
Q

is capacity dynamic and how

A

yes
capacity can change
e.g when a machine is having maintenance, capacity is reduced
capacity needs to take account of seasons.g chocolate factories- easter eggs in easter.

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33
Q

what is capacity utilisation

A

The proportion of a business’ capacity that is actually being used over a specific period

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34
Q

what is the capacity Utilisation Formula

A

actual level of output/potential possible output x 100

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35
Q

why does capacity utilisation matters

A

useful measure of productive efficiency

higher utilisation can reduce unit costs

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36
Q

what are the key costs of capacity

A

equipment
facilities
labour

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37
Q

why do most businesses operate below capacity

A

lower than expected market demand

a loss of market share

seasonal variations in demand

recent increase in capacity

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38
Q

what are the dangers of operating at low capacity utilisation

A

high unit costs- impact on competitiveness
less likely to reach break even output
capital tied up in under-utilized assets

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39
Q

what is sub contract

A

hiring another company to do work for you

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40
Q

what are the problems of working at high capacity

A

negative effect on quality

employees suffer- high pressure

loss of sales

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41
Q

What is labour productivity

A

The output per employee
formula: output per period/ no. of employees.

usually expressed as a quantity per employee

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42
Q

why is labour productivity important

A

significant cost of production
improvements in labour productivity helps to reduce unit costs.
may be a crucial source of competitive advantage where product are standardised- allowing lower prices.

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43
Q

what are the factors affecting labour productivity

A

working conditions
pay and incentives
leadership style, motivation
job design
skills of the workforce
equipment

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44
Q

what are the ways to improve labour productivity

A

offer incentives, bonuses
democratic leadership style- motivation
develop, acquire specialist equipment
training

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45
Q

what is quality

A

A product or service is of good quality if it meets the needs and expectations of the customer.

46
Q

intangible measures of quality

A

market reputation
brand image
exclusiveness

47
Q

tangible measures of quality

A

reliability
functions and features
support levels and standards
cost of ownership

48
Q

why is quality important in business

A

markets are highly competitive: due to customers being more knowledgeable and demanding
- prepared to complain about quality
-able to share quality art poor

49
Q

benefits of greater quality

A

-customer satisfaction
-repeat purchase
-customer recommendation
-lower marketing costs
-higher customer loyalty

also helps to differentiate businesses products from its competition.

50
Q

what are examples of poor quality

A

product fails
product does not perform as promised
product is delivered late
poor instructions for use
unresponsive customer service

51
Q

what are the costs of Poor quality

A

lost customers
cost of reworking or remaking products
costs of replacement or refunds
wasted materials

52
Q

examples of poor quality

A

Mattel recalls 19 million toys supplied from china- cost 30mil

53
Q

ways of improving quality

A

-trainingf and motivating
-understanding customers expectation
-use tech
-work closely with suppliers
-quality control
-quality assurance

54
Q

what is quality control

A

The checking of a good or service before it is delivered to a customer

at the end of the process

55
Q

advantages of quality control

A

quality can be monitored
stops faulty products reaching the customer
common problems can be identifies
inspector takes responsibility

56
Q

what are the disadvantages of quality control

A

Takes responsibility away from operatives

requires specialist/additional personnel

problems only identified at end of process

57
Q

what quality assurance

A

The checking of a product or service at each stage of its production e.g as it travels along the production line

relies upon self checking

58
Q

advantages of quality assurance

A

-spots any faults early saving resources being wasted at the next stage of the production process.
-Motivates workers whoa re responsible for ensuring quality standards are met.
-Aims to achieve an objective of 0 defects
-enhances the reputation of the business as less chance of faulty goods reaching the end customer

59
Q

disadvantages of quality assurance

A

Requires staff training and high levels of staff commitment
-Can slow down the production process and labour productivity leading to higher unit costs.
-may demotivate workers who feel under pressure.

60
Q

what is a supplier

A

A business or individual that provides goods and services to another business.

61
Q

why are suppliers important

A

-Suppliers determine many of the costs of a business (e.g. raw materials, distribution)

  • suppliers are closely linked to product quality

-suppliers can be important source of finance to a business (trade credit)

62
Q

what makes an effective supplier

A

Price
quality
reliability
communication
Financially secure
capacity

63
Q

what is a supply chain

A

a network between a company and its suppliers to distribute a specific product, and the supply chain represents the steps it takes to get the product or service to the customer.

64
Q

what are strategy supplier

A

business cannot succeed without maintaining an effective supplier relationship.
Those goods and services are crucial to business success.

65
Q

how will suppliers influence performance

A

-Lower purchase costs- better prices from suppliers lower the costs of a business
-better quality- crucial for a business to satisfy customers
-improved customer service- fewer late deliveries
-increased productivity
-more flexible capacity

66
Q

what is trade credit

A

where a business buys goods and services from a supplier and pays for them later

67
Q

what is inventory

A

the raw materials, work-in- progress and finished goods held by a firm to enable production and meet customer demand.

68
Q

what are the three main types of inventory

A

Raw materials and components

work in progress

finished goods.

69
Q

what are raw materials and components

A

Bought from suppliers , used in production process e.g arts for assembly or ingredients.

70
Q

what is work in progress inventory

A

semi or part- finished production e.g construction projects

71
Q

what are finished goods

A

completed products ready for sale or distribution e.g products on supermarket shelves; goods in the Amazon warehouses

72
Q

what are the key reasons to hold inventory

A

enable production to take place

-satisfy customer demand

-precaution against delays from suppliers

-allow efficient production

-allow for seasonal changes

73
Q

what are the main influences on amount of inventory held

A

need to satisfy demand

need to manage working capital

risk of inventory loosing value

74
Q

what is the cost of storage on the costs of holding inventories

A

more inventories require large storage space and possibly extra employees and equipment to control and handle them.

75
Q

what is interest costs in the costs of holding inventory

A

holding inventories means tying up capital on which the business may be paying interest

76
Q

what is obsolescence risk in the costs of holding inventories

A

the longer inventories are held , the greater is the risk that they will become obsolete.- unusable or not capable of being sold

77
Q

what is stock out costs in the costs of holding inventories

A

a stock out happens if a business runs out of inventory. This can result in: Lost sales and customer goodwill
- cost of production stoppages or delays
- extra costs of urgent, replacement orders.

78
Q

why would a business use inventory control charts

A

to maintain inventory levels to that the total costs of holding inventories is minimised.

79
Q

what is the maximum level on a inventory control chart

A

the max level of inventory a business can or wants to hold

80
Q

what is the re-order level of an inventory control chart

A

acts as a trigger point, so that when inventory falls to this level, the next supplier order should be placed.

81
Q

what is the lead time of an inventory control chart

A

the amount of time between placing the order and receiving the inventory

82
Q

what is the minimum inventory level

A

the minimum amount of product the business would want to hold in stock.
Assuming the minimum stock level is more than zero, this is known as buffer stock.

83
Q

what is buffer stock

A

An amount of inventory held as a contingency in case of unexpected orders so that such orders can be met in case of any delays from suppliers.

84
Q

what are the factors affecting /when how much inventory to re-order

A

lead-time from the supplier
- how long it takes for the supplier t deliver the order
-higher lead times may require a higher re-order level.

implications of running out (stock-outs).
- if stock-outs are very damaging, then have a high re-order level and quantity.

demand for the product
- Higher demand normally means higher re-order levels.

85
Q

what are the advantages of low inventory levels

A

lower inventory holding costs

lower risk of inventory obsolescence

consistent with operating ‘lean’

86
Q

what are the advantages of operating at high inventory levels

A

production fully supplied- no delays

better able to handle unexpected changes in demand or need for higher output

less likelihood of ‘stock-outs’

87
Q

what is just-in-time

A

-inventory required for production arrives just as it is needed

88
Q

what is lean production

A

minimal capital tied up in inventories

89
Q

what is the importance of reducing waste

A

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

90
Q

what are the different types of waste

A

-overproduction
-waiting time
-transport
-stocks
-motion
-defects

91
Q

what is over-production

A

making more than is needed- leads to excess stocks

92
Q

what is waiting time

A

equipment and people standing idle waiting for a production process to be completed to resources to arrive.

93
Q

what is transport

A

moving resources (people, materials) around unnecessary

94
Q

what are stocks in relation to waste

A

often held as an acceptable buffer, but should not be excessive

95
Q

what is motion in relation to waste

A

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

96
Q

what is defects in relation to waste

A

output that does not reach the required quality standard- often a significant cost to an uncompetitive business.

97
Q

what is time-based management

A

a feral approach that recognises the importance of time and seeks to reduce the level of wasted time in the production processes

98
Q

what is simultaneous engineering

A

a project management approach that helps businesses develop and launch new products more quickly. All of the areas involved in a project are planned together.

99
Q

what are the main benefits of success fun simultaneous engineering

A

-new product is brought to the market much more quickly
-Business may be able to charge a premium price that will give a better profit margin and help recoup R and D costs.
-A greater sense of involvement across business functions improves staff commitment to the project
-can be a source of competitive advantage for the firm if it can get a reliable new product into the market and build brand loyalty before its competitors.

100
Q

what is cell production

A

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 suppliers.

101
Q

what are the potential benefits of cell production

A

-closeness of cell members should improve communication, avoiding confusion arising from misunderstood or non-received messages.
-workers become multi skilled and more adaptable to the future needs of a business
-greater worker motivation, arising from variety of work, team working and more responsibility.
-quality improvements

102
Q

what are the downsides of using cell production

A

-workers can feel as if they are constantly pushed

-The business may have to invest in new materials and ordering systems

-may not allow businesses to use its machinery as intensively

103
Q

what are the key features of Just in time (JIT)

A

customer orders determine what is produced

-required complex production scheduling

-requires close cooperation with high-quality suppliers

104
Q

advantages of JIT

A

-lower stocks means a reduction in storage space saving rent and insurance costs
-less working capital is tied up in stock
-less likelihood of stock perishing

105
Q

disadvantages of JIT

A

-little room for mistakes as minimal stock is kept for re-working faulty products
-production is highly reliant on suppliers
- no spare finished product available.

106
Q

what reward do you get for labour

A

wages

107
Q

what reward do you get for capital

A

interest

108
Q

what reward do you get for enterprise

A

profit

109
Q

what reward do you get for land

A

rent

110
Q

what is capital intensive

A

which uses a relatively high proportion of capital such as machinery in the production of a good or service.

111
Q
A

buisness (14 decks)

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