Unit 4

Question 1

Types of operational objectives

Answer 1

-reduced unit costs
-quality targets
-speed of response and flexibility
-dependability
-environmental objectives

Question 2

What is the economic cycle?

Answer 2

The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession)

Question 3

External influences on operational objectives

Answer 3

-political or legal influences
-economic influences
-technological influences
-competitive influences

Question 4

Internal influences on operational objectives

Answer 4

-finance
-marketing
-human resources

Question 5

Four main operations data

Answer 5

-capacity
-capacity utilisation
-labour productivity
-unit costs

Question 6

What is capacity?

Answer 6

The total or maximum output a business can produce in a given time period if it is working flat out

Question 7

Capacity utilisation calculation

Answer 7

Actual output in given time period
____________________________________ X 100

maximum possible output per period

Question 8

Labour productivity calculation

Answer 8

output per time period
____________________________________ X 100

      Number of employees

Question 9

Unit cost calculation

Answer 9

total cost
_________________________

    units of output

Question 10

What is excess capacity?

Answer 10

Occurs where actual production falls below maximum potential production

Question 11

How to increase efficiency and labour productivity?

Answer 11

-investment in technology
-improvements in training and motivation
-job redesign
-reduction in labour force

Question 12

What is just in time production?

Answer 12

An inventory strategy that companies employ to increase efficiency and decrease waste by receiving goods only when they are needed in the production process.

Question 13

Benefits of JIT

Answer 13

-reduced waste in terms of damaged stock
-reduced space and staff due to less warehousing
-greater flexibility in terms of responsiveness to changes in taste or fashion
-improved motivation due to greater involvement of the workforce in the process
-lower costs as a consequence of the above

Question 14

Drawbacks of JIT

Answer 14

-running out of stock
-opportunities for bulk buy purchases
-trust in the supplier to provide the necessary quality required as components of straight to the production line

Question 15

Difficulties of increasing efficiency and labour productivity

Answer 15

-cost
-quality
-resistance of employees

Question 16

How to utilise capacity efficiently

Answer 16

-increase sales
-reduce capacity
-alternative uses for capacity

Question 17

What if there isn’t enough capacity?

Answer 17

-outsourcing
-investment
-reducing pricing

Question 18

How to use technology to improve operational efficiency?

Answer 18

-more advanced computer systems
-the internet
-computer-aided manufacture (CAM)
-computer-aided design (CAD)

Question 19

Benefits of new updated technology

Answer 19

-reduces unit cost of production
-opportunity to charge premium price
-consistent quality can be guaranteed by CAM
-using technology efficiently may enable employees to work more efficiently
-may allow access to new markets
-can reduce waste

Question 20

Cost of using new technology

Answer 20

-can be a drain on an organisation’s capital
-requires training of the existing workforce and potentially recruitment of new employees
-could threaten job security of employees

Question 21

Importance of quality

Answer 21

-provide a USP
-allow a business to charge higher prices
-enable a business to increase its sales
-enhance reputation and brand loyalty

Question 22

What is quality assurance?

Answer 22

A system for ensuring the desired level of quality in the development, production and delivery of products and services

Question 23

What is total quality management?

Answer 23

There is a culture of quality throughout the organisation.

Question 24

Characteristics of TQM

Answer 24

-focus on customer needs
-continuous improvement
-employee involvement and empowerment
-managing suppliers

Question 25

What is kaizen?

Answer 25

The Japanese business philosophy of continuous improvement

Question 26

Benefits of improving quality

Answer 26

-enhanced reputation and increased brand loyalty -competitive advantage in quality may give USP -increased revenue due to higher sales at potentially higher price -greater flexibility in terms of price

Question 27

Difficulties of improving quality

Answer 27

-business has to bear the cost of training staff, administration of the system and equipment -employees can be resistant to change

Question 28

Consequence of poor quality

Answer 28

-cost of scrapping or reworking products -the additional costs if goods are returned for repair or replacement under warranty -the costs resulting from damage to the business's reputation

Question 29

Three areas of the supply chain

Answer 29

-the supply of materials to the manufacturer -the manufacturing process -the distribution of the finished goods to the consumer

Question 30

Too little supply

Answer 30

a business will miss out on lucrative orders but will also lose future orders due to lack of dependability

Question 31

Too much supply

Answer 31

will incur the costs of holding the excess and a business may be faced with selling the goods at a reduced price

Question 32

How is supply managed?

Answer 32

-flexible workforce -increased capacity -produce to order -outsourcing

Question 33

Influences on amount of inventory held

Answer 33

-nature of product -nature of production -nature of demand -opportunity cost

Question 34

Features of an inventory control chart

Answer 34

-buffer level inventory - minimum amount of inventory held -reorder level- level of inventory at which a new order is placed -lead time- time between an order being made and its arrival in the business -maximum stock level- the highest amount of inventory a business is able to hold -reorder quantity- the amount ordered

Question 35

Influences on choice of suppliers

Answer 35

-dependability -flexibility -quality -price and payment terms -ethics

Question 36

Outsourcing

Answer 36

the subcontracting of non-core activities of an organisation in order to free up cash, time, personnel and facilities, thereby concentrating on other areas in which it has a competitive advantage.

Question 37

Benefits of outsourcing

Answer 37

-enabling of quicker response to increases in demand -greater dependability for customers during periods of increased demand -lower cost, particularly in cases of temporary increases in demand

Question 38

Drawbacks of outsourcing

Answer 38

-quality may suffer -reliability of supplies may not be guaranteed -it is likely to be more costly than producing in house