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biz! > Unit 4-decision making to improve operational performance > Flashcards

Unit 4-decision making to improve operational performance Flashcards

1
Q

what are the operations function of a business responsible for?

A

the actual production of a good or service

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2
Q

what are some operational objectives?

A

-reduced unit costs
-quality targets
-environmental objectives
-dependability
-speed of response and flexibility
(must be SMART)

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3
Q

what are some external influences on operational objectives?

A

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

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4
Q

what is the economic cycle?

A

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

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5
Q

what are some internal influences on operational objectives?

A

-finance
-marketing
-HR

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6
Q

what are the 4 main areas or operations?

A

-capacity
-capacity utilisation
-labour productivity
-unit costs

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7
Q

what is capacity?

A

the total or max amount that a business can produce in a given time period if it is working flat out

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8
Q

what is capacity utilisation?

A

the actual production of a business in a given time period as a percentage of the maximum capacity

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9
Q

formula for capacity utilisation

A

actual output in time period/ max possible output per period x100

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10
Q

what its labour productivity?

A

the efficiency of individual workers and of its interest to Human Resources as well as operational managers

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11
Q

formula for labour productivity

A

output per time period/ number of employees

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12
Q

what are unit costs?

A

‘the average cost of production’ and it is the cost of producing one unit of output

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13
Q

formula of unit cost

A

total cost/ units of output

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14
Q

what happens to productivity and unit costs if capacity utilisation increases with no change in numbers employed?

A

-productivity rises
-unit costs fall

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15
Q

what happens to productivity and unit costs if capacity utilisation decreases with no change in numbers employed?

A

-productivity falls
-unit costs rise

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16
Q

what is excess capacity?

A

occurs when actual production falls bellow max potential production

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17
Q

why are efficiency and labour productivity important?

A

an increase in labour productivity will lead to a reduction in unit costs and therefore will lead to the business being more competitive in terms of price

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18
Q

how can you increase efficiency and labour productivity

A

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

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19
Q

what is JIT¿? (just in time management)

A

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

20
Q

adv of JIT

A

-reduced waste in terms of damaged stock
-reduced space and staff due to less warehousing
-lower costs
-improved motivation due to involvement
-greater responsiveness to changes

21
Q

dis of JIT

A

-running out of stock
-opportunities for bulk purchase
-trust with supplier

22
Q

what are some difficulties of increasing efficiency and labour productivity?

A

-cost
-quality
-resistance of employees

23
Q

what are the resources that are factors of production?

A

-land: physical land and natural resources eg: oil and iron ore
-labour: the workers employed
-capital: machines and equipment
-enterprise: the skill of combining the other factors of production

24
Q

what does capital intensive mean?

A

describes those businesses requiring a large amount of capital relative to labour

25
Q

what does labour intensive mean?

A

describes those businesses requiring a large proportion of labour relative to capital

26
Q

how might a business overcome situations of excess or spare capacity?

A

-increase sales: undertaking a new marketing campaign or extension strategies
-reduce capacity: rationalise production and sell off some capacity
-alternative uses: introduction of new products or leasing it to other businesses

27
Q

how might a business deal with a lack of capacity?

A

-outsourcing: transferring portions of work to outside suppliers
-investment: investing into the permanent establishment of new capacity, only if demand is expected to be high in the future
-reducing demand: increasing price, use of dynamic pricing

28
Q

what are the types of technology used in operations that may affect production?

A

-more advanced computer systems: automated stock control systems and electronic data interchange
-internet: promote and sell products and communicate with customers
-computer-aided manufacture (CAM): robots as an integral part of the production process
-computer-aided design (CAD): can be linked to CAM systems

29
Q

what are the benefits of a new and updated technology?

A

-reduces unit costs of production, enhancing competitiveness
-can offer a premium price until the competition catches up
-consistent standard of quality can be guaranteed using CAM
-allow access to new markets
-reduce waste
-employees can work more efficiently

30
Q

what are the costs of a new and updated technology?

A

-it can drain on an organisation’s capital, difficult to raise funds
-inevitably requires training of the workforce, recruitment?
-may face opposition from employees, especially if job security is threatened

31
Q

why is quality important?

A

-it can provide a USP and give customers a reason to buy the products
-can charge higher prices, increasing profit margins
-increased sales
-enhance reputation and brand loyalty

32
Q

what is quality assurance?

A

a system for ensuring the desired level of quality, production and delivery of products and services
-employees have to make sure that the quality is met at each stage of the production process

33
Q

what is total quality management (TQM)?

A

where there is a culture of quality throughout the organisation
-checks throughout the process

34
Q

characteristics of TQM

A

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

35
Q

what was Kaizen’s philosophy?

A

-continuous improvement -all -employees are encouraged to identify and suggest possible improvements in the production process
-culture of participation and involvement

36
Q

benefits of improving quality

A

-enhanced reputation and brand loyalty
-competitive advantage (might give a USP)
-increased revenue= higher sales and perhaps higher selling price
-greater flexibility in terms of price

37
Q

difficulties of improving quality

A

-costs: training, administration of the system, equipment
-employees may be resistant to change or might demand higher pay

38
Q

what is a supply chain and what is it composed of?

A

the whole process of getting a good or service to the consumer, composed of:
-the supply of materials to the manufacturer
-the manufacturing process
-the distribution of the finished goods to the customer

39
Q

what is flexibility?

A

-the ability of a business to meet a customer requirements.
-it can involve variations in specification (mass customisation)-> tailoring goods to specific customer requirements

40
Q

what is speed of response and dependability

A

-speed of response is how quickly a business fulfils an order
-dependability is the punctuality or whether it fulfils an order on time

41
Q

how might a business be able to manage demand?

A

using the marketing mix
-increasing or reducing prices
-increasing or reducing advertising
-sales promotions

42
Q

how can supply be managed?

A

-flexible workforce: multi-skilled workforce, part-time or zero hour contracts
-increase capacity: invest in more capacity for a growth in demand
-produce to order: used a lot by tailors, restaurants and aircrafts
-outsourcing: another business is contracted to produce the extra goods required in order to satisfy demand

43
Q

what are some influences on the amount of inventory held?

A

-nature of the product: no holding stock of perishable goods
-nature of production: JIT production = less stock held
-nature of demand: seasonal products may need a higher level of stock than those that have regular demand
-opportunity cost: an money tied up in stock can present an opportunity cost and can be used somewhere else

44
Q

what might you find in an inventory control chart?

A

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

45
Q

what are the influences on the choice of suppliers?

A

-dependability: reliable and able to order on time?
-flexibility: able to respond efficiently to changes in demand?
-quality: consistent and reliable quality?
-price and payment terms: prices charged and payment terms (such as credit) competitive?
-ethics: operates in a socially responsible manner?

46
Q

adv of outsourcing

A

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

47
Q

dis of outsourcing

A

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

biz! (10 decks)

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