unit 4 key words

Question 1

ADDED VALUE

Answer 1

Value added is the extra amount the customers pay over the cost of the materials and the value added gives a firm a surplus to pay wages, dividends and overheads.

Question 2

ADDING VALUE

Answer 2

The amount of increased worth of resources by modifying them. Businesses aim to transform inputs into higher value outputs by branding, advertising, packaging combining materials etc. E.g. a potter adds value to a lump of clay by making it into a mug.

Question 3

BUFFER LEVEL OF INVENTORY

Answer 3

The minimum level of stock targeted by a business. The buffer level should be sufficient to cover for sudden increases in demand or unexpected loss of supplies.

Question 4

CAPACITY

Answer 4

the maximum output a firm can produce using existing resources.

Question 5

CAPACITY UTILISATION

Answer 5

The percentage of maximum possible output that is being produced. A firm producing at its maximum is said to be at full capacity

Question 6

DEPENDABILITY

Answer 6

whether a business is punctual in delivering its promises, produces consistent, reliable quality and durable products. A highly dependable organisation is likely to have a better brand image.

Question 6

CAPITAL INTENSIVE PROCESS

Answer 6

Production that uses a high proportion of machines compared to labour.

Question 7

EFFICIENCY

Answer 7

the extent to which output is maximised from a given quantity of inputs.

Question 8

FLEXIBILITY

Answer 8

the ability of an organisation to change its operations in some way

Question 9

INVENTORY

Answer 9

stock of raw materials, work-in-progress and finished goods

Question 10

STOCK CONTROL CHART

Answer 10

A diagram that is used to register the levels of stock /inventory over a set time span.

Question 11

JUST IN TIME

Answer 11

Manufacturing system, which schedules the delivery of stocks immediately before it is needed. This minimises the raw material stock held.

Question 12

KAIZEN

Answer 12

Continuous improvement. A production philosophy involving small steps of incremental improvement.

Question 13

LABOUR INTENSIVE PROCESS

Answer 13

production which uses a high proportion of labour and a relatively small number of machines.

Question 14

LABOUR PRODUCTIVITY

Answer 14

The average output produced by each worker in a given time period

Question 15

LEAD TIME

Answer 15

The time taken for a customer request to be fulfilled or the amount of time that elapses between when a process starts and its completion

Question 16

LEAN PRODUCTION

Answer 16

Business philosophy to minimise use of resources to achieve a cost advantage. It includes a range of measures such as just-in-time, total quality management, team-working etc.

Question 17

MASS CUSTOMISATION

Answer 17

Offering individually tailored goods or services on a large scale. Large scale production methods are used but each item is tweaked to suit the individual customer. E.g. colour and features on Jaguar Land Rovers.

Question 18

OPERATIONAL OBJECTIVES

Answer 18

Specific focused short term targets of the operations department including quality levels, productivity & efficiency (e.g. units per week or employee) unit costs per item, number of items to produce per time period

Question 19

OPTIMAL MIX OF RESOURCES

Answer 19

the best mix of labour and machines to produce the appropriate quality at the lowest cost.

Question 20

OUTSOURCING

Answer 20

the transfer of activities previously done in-house to be produced by a different business

Question 21

PART–TIME WORKER

Answer 21

Employees who work for less than the full weekly hours e.g.
students who do a Saturday job.

Question 22

QUALITY

Answer 22

those features of a product or service that allow it to meet the customer requirements e.g. durability, brand image.

Question 23

QUALITY ASSURANCE

Answer 23

A system of agreeing and meeting quality standards. There is focus on designing systems that produce consistently good output.

Question 24

QUALITY CONTROL

Answer 24

system that uses inspection as a way of checking quality of products or services by inspecting a sample.

Question 25

RE-ORDER LEVEL

Answer 25

the inventory level at which an order is placed for a more stock.

Question 26

RE-ORDER QUANTITY

Answer 26

the actual number of products purchased from a supplier in a particular order.

Question 27

SUPPLY CHAIN

Answer 27

all the stages of the production process and all the firms that have a part in producing the product. E.g. cocoa growers, dairy farmer, shippers, paper makers etc. for Cadbury chocolate makers.

Question 28

TEMPORARY WORKER

Answer 28

Employees who have a fixed term work contract e.g. one year. They are likely to be full time workers.

Question 29

UNIT COST (AVERAGE COST)

Answer 29

The mean cost of producing one unit. Reducing costs occur when efficiency is improved.