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Business > Unit 4: Operations > Flashcards

Unit 4: Operations Flashcards

1
Q

Give 2 reasons why businesses set operational objectives

A
  • to act as a focus for decision making
  • to improve co-ordination
  • to improve efficiency
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2
Q

Give 4 operational objectives

A
  • cost
  • quality
  • speed of response
  • environmental obj
  • added value
  • dependability
  • flexibility
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3
Q

How does lower cost make a business more competitive

A

Lower costs = lower prices = increase sales

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4
Q

What does reducing unit cost result in

A

Lower prices or a higher profit margin

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5
Q

How can you reduce the unit cost

A

Reducing the fixed cost or the variable cost

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6
Q

How do you reduce variable costs

A

By cutting labour and raw material cost

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7
Q

Is reducing fixed cost or reducing variable cost a more specific focus

A

Fixed cost - it’s a manageable target and a more specific focus

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8
Q

What can be a problem with businesses trying to lower their costs

A

Quality might be sacrificed, especially if the competition comes down to cost

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9
Q

“There is no single, agreed measure of quality”

TRUE or FALSE

A

TRUE

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10
Q

What five measures of quality are used

A
  • customer satisfaction
  • customer complaints
  • level of product returns
  • scrap rate
  • punctuality
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11
Q

What is good about customer complaints

A

It shows if a business has problems that need rectifying

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12
Q

What is bad about customer complaints

A

It can damage a business’ reputation

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13
Q

What is a sign of customer dissatisfaction

A

If customers return a high percentage of goods they’ve purchased

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14
Q

What is scrap rate

A

Where manufacturers track rejects through the manufacturing process

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15
Q

What does the scrap rate show

A

It shows whether the production process is working effectively because scrap is wasted money which will increase the unit cost

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16
Q

What does punctuality measure

A

How promptly a business delivers its goods

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17
Q

What is the punctuality equation

A

(Deliveries on time ÷ total deliveries) x 100

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18
Q

What does speed of response refer to

A

The speed at which a business can respond to change

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19
Q

What is speed of response measured by

A

The difference in time between a customer requesting goods and the time they receive it

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20
Q

What does a quick speed of response lead to

A

It leads to customer satisfaction which can lead to customer loyalty

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21
Q

What are the 4 different types of flexibility

A
  • volume flexibility
  • product flexibility
  • mix flexibility
  • delivery flexibility
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22
Q

What is volume flexibility

A

The ability to change level of output in response to customer demand

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23
Q

What is product flexibility

A

The ability to switch production from one product to another

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24
Q

What is mix flexibility

A

The ability to provide wide range of alternative versions of particular product/service

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25
Q

What is delivery flexibility

A

Being able to adapt quickly to changes in timings and volume of deliveries

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26
Q

What does dependability entail in terms of providing a service

A

a consistency of quality in the services

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27
Q

What does dependability entail in terms of providing a product

A

The durability of the product and how long it lasts

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28
Q

Why are environmental objectives important in the operations

A

It’s important they operational side doesn’t harm environment, especially for the CSR report

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29
Q

Give 4 environmental objectives

A
  • reducing waste
  • reducing carbon footprint
  • self-sufficiency
  • increase recycling
  • reduce noise level/pollution
  • reduce water pollution
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30
Q

What is added value

A

The process of increasing the worth of the resources by modifying them

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31
Q

Give 2 added value objectives

A
  • increase spending on research and development
  • achieving a certain number of patents
  • developing particular innovation
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32
Q

Give 4 external influences on operational objectives

A
  • market objectives
  • competitors actions & performance
  • technological change
  • economic factors
  • environmental factors
  • politics/legislation
  • suppliers
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33
Q

Give 3 internal influences on operational objectives

A
  • corporate objectives
  • finance
  • Human Resources
  • nature of the product
  • resources available
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34
Q

What are the 4 measures of operational performance

A
  • labour productivity
  • unit costs
  • capacity
  • capacity utilisation
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35
Q

What is a labour intensive business

A

A business where labour costs outweigh capital costs of a business

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36
Q

What is labour productivity

A

The volume of output that is obtained from each employee - this is a measure of business efficiency

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37
Q

What is the equation for labour productivity

A

Output per period ÷ no. of employees

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38
Q

What does achieving high labour productivity depend on

A

the quality and extent of machinery, skills, motivation, method of production and reliability of raw materials and suppliers

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39
Q

Give 3 ways to achieve labour productivity

A
  • better training/ new workers w/ better qualifications
  • investment in equipment and tech
  • improve workforce motivation
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40
Q

What is the cost of improving labour productivity

A
  • it may conflict with other objectives
  • training takes time
  • it involves additional expenditure so a business should only implement them if it generates additional revenue to pay for the changes
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41
Q

What is equation for unit cost

A

total cost ÷ units of output (in volume)

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42
Q

At what point is it vital for a business to achieve lower unit costs

A

When competition is based on price

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43
Q

Give 2 influences on unit cost

A
  • how many units a business can make with its resources
  • how efficient a workforce is producing the goods
  • how efficient the machinery is
  • how easily variable cost can be controlled
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44
Q

What is capacity

A

The maximum goal level of output/production that a business can produce in a given time period

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45
Q

Give 2 things the ideal capacity depends on

A
  • the level of demand for a product
  • seasonality of output
  • flexibility of production line
  • seasonality of demand
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46
Q

What is capacity utilisation

A

The extent to which the company’s maximum possible output is being reached

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47
Q

Why is capacity utilisation being at 100% bad

A

There’s no scope for maintenance and repair because all resources are being used to produce at max capacity

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48
Q

What is the equation for capacity utilisation

A

(actual output per annum ÷ max possible output per annum) x 100

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49
Q

Give 3 advantages of spare capacity

A
  • more time for maintenance, repairs and training
  • less pressure and stress for staff
  • allows business to cope w/ sudden increase in demand
  • firms may use calculations of spare capacity to see max possible sales that it could achieve before it needs expands its capacity
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50
Q

What does every point below 100% in capacity show

A

Resources not being used and a higher fixed cost per unit

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51
Q

Give 3 causes of spare capacity

A
  • new competitors or new products = fall in demand for existing products
  • changes in taste/fashion = fall in demand
  • unsuccessful marketing
  • seasonal demand
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52
Q

Give 2 disadvantages of spare capacity

A
  • higher proportion of fixed cost per unit
  • negative image of being unsuccessful
  • less work = employees bored/ demoralised
  • lower profits
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53
Q

Give 3 reasons why capacity is important

A
  • can enable a business to meet level of demand for a product
  • efficient capacity management ensures firm isnt excessive amounts on capital equipment
  • ideally, firms capacity group allow some flexibility between production lines
  • industries w/ seasonal demand = needs to ensure they have capacity to cope w/ peak demand periods
  • in competitive industries, a lack of capacity can have serious consequences
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54
Q

What is rationalisation

A

A process by which a firm improves its efficiency by cutting the scale of its operations

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55
Q

When is a business likely to use rationalisation

A

When a business has spare capacity. It will use rationalisation to reduce capacity and save unnecessary expenditure

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56
Q

What 3 ways can you reduce capacity

A
  • selling part of production area = cuts fixed costs
  • changing to a shorter working week/ day
  • laying off workers
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57
Q

What is the main cause of capacity shortage

A

An increase in demand which outpaces the firms ability to increase production levels

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58
Q

Give 3 ways to increase capacity

A
  • building/ extending factory plants
  • ask staff to work overtime/ longer times
  • transferring resources from another area
  • hire new staff
  • outsourcing/ subcontracting
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59
Q

What are the dangers of operating at low capacity utilisation

A
  • higher unit costs which impacts competitiveness
  • less likely to reach breakeven output
  • capacity tied up in under - utilised assets
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60
Q

Give 3 problems working at high capacity

A
  • can have negative effect on quality
  • employees suffer
  • loss of sales if you cant meet unexpected increases in demand
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61
Q

What is the importance of labour productivity

A
  • an increase in labour productivity will decrease labour costs per unit
  • lower unit cost = lower prices = competitive advantage
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62
Q

What 4 factors influence labour productivity

A
  • extent and quality of fixed assets
  • skills, ability and motivation of staff
  • methods of production
  • external factors e.g., reliability of suppliers
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63
Q

What 3 things can a business do a as result of greater efficiency

A
  • pay higher wages to workers
  • offer lower prices / increase quality
  • spend more money on local environment
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64
Q

How can a business increase efficiency and labour productivity

A
  • improves fertility of land
  • using recyclable resources
  • greater employee education/ training
  • increasing level of investment in capital equipment
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65
Q

What is economies of scale

A

When unit costs fall as output increases

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66
Q

What’s the difference between an internal and external economies of scale

A

Internal economies of scale arrears from increased output of the business itself and external economies of scale occurs within an industry and therefor all competitors benefit

67
Q

Give 5 economies of scale

A

Technical
Purchasing
Marketing
Finance
Social and welfare
Specialisation
Research and development
Managerial and administrative

68
Q

What are some difficulties trying to improve labour productivity

A
  • Unlikely fertility of land can be increased indefinitely
  • education and training consumes resources
  • potential trade off with quality
  • potential for employee resistance
  • financial methods of motivation are more effective short term
  • increasing level of investment in capital equip = too much emphasis on capital goods = consumers have fewer products available short term
69
Q

What are diseconomies of scale

A

Disadvantages an org experiences due to increase in size. These cause a decrease in efficiency/ increase in unit costs

70
Q

What are the 3 main diseconomies of scale

A

Coordination
Communication
Motivation

71
Q

Give two diseconomies of scale (less important)

A

Technical
Excessive bureaucracy
Staff problems
Less flexibility

72
Q

What is lean production

A

Production based on a range of time-saving and waste-saving qualities whilst ensuring quality

73
Q

Give 4 types of waste

A
  • Over production
  • defects
  • transport (moving resources around unnecessarily)
  • motion (workers appear busy but not adding any value)
  • waiting time
74
Q

Name the 5 lean production methods

A
  • Just in time management
  • Cell production
  • Time based management
  • Kaizen
  • Simultaneous engineering
75
Q

What are the 5 aims of lean production

A
  • zero delay
  • zero stocks
  • zero mistakes
  • zero waiting
  • zero accidents
76
Q

What does effective lean production require

A
  • excellent communication and good relations
  • reliable, committed, flexible and motivated employees
  • suitable equipment
  • culture of quality assurance
77
Q

What is time based management

A

A general approach the recognises the importance of time and seeks to reduce level of wasted time in production process

78
Q

What are the benefits of a effective time management

A
  • quicker response time to meet changing market and customer needs
  • faster new product development
  • reduction in waste = greater efficiency
79
Q

What is cell production

A

A form of team-working where production processes are split into ‘cells’ (teams). Each cell is responsible for a complete unit of work

80
Q

What are the advantages of cell production

A
  • employee motivation - feel like they have more motivation over their work
  • cell members can divide the work along themselves and share skills and expertise
  • quality improvements
  • improves communication
81
Q

What are the disadvantages of cell production

A
  • output m at be lower than ‘flow’ production system
  • different ‘cells’ may work at different speeds = may lead to conflict and tension
  • may need to invest heavily in machinery multiple cells require same equip
  • allocation of work to cells has to be efficient so employees have enough work but not so much they’re unable to cope
82
Q

What is just in time production

A

Producing products to order

83
Q

What is the aim of just in time production

A

To ensure inputs/ stock into the production process only arrive when needed and reduce waste by eliminating the need for high levels of inventory

84
Q

Give 3 benefits of JIT

A
  • reduced stock holding = reduction in storage space = reduced costs
  • increased labour productivity and efficiency
  • more motivated workforce = reduced labour turnover and increased workers output
    -reduced waste and inventory holding costs
  • less risk - stock won’t perish/ go out of date
  • less staff needed to manage and control stock
85
Q

Give 3 difficulties/ drawbacks of JIT

A
  • little room for mistakes as minimal stock is kept for reworking faulty products
  • fewer opportunities for bulk buying
  • halting of production if suppliers fail to deliver something
  • no spare finished products to meet unexpected orders
86
Q

What is simultaneous engineering

A

An approach to project management that helps firms develop and launch new products quickly. All parts of pricey planned together- everything is considered simultaneously (in parallel) rather than separately (in series)

87
Q

Give two benefits of simultaneous engineering

A
  • new product brought to market quickly
  • improves staff commitment to project and greater sense of involvement
  • can be source of competitive advantage (first move advantage) and can build brand loyalty before rivals
88
Q

What are the 4 factors of production

A
  • enterprise
  • land
  • capital
  • labour
89
Q

What does operation management include

A
  • deciding the best way of producing goods
  • deciding the best resources to use and the combo of resources needed
  • deciding where to get the resource from
  • deciding how many resources to hold in stock
90
Q

What is a labour intensive business

A

A business that has specialised tiles for employees- methods of production that used high levels of labour in comparison to capital equipment e.g. Restaurants

91
Q

What is a capital intensive business

A

A business where high investment is needed in capital machinery e.g. nuclear power station

92
Q

Name 4 factors that influence the resource mix

A
  • method of production
  • skills and efficiency of factors of production
  • relative prices of resources
  • reliability of labour and capital
  • size and financial position
  • nature of product/service
  • availability of resources
93
Q

What 3 things do you have to do to become more capital intensive

A
  • raise finanace
  • changeover: introduce new equip/ways of producing goods
  • innovation: improve productivity through new equip
94
Q

What 3 things do you have to do to maintain/ improve being labour intensive

A
  • attract the right people
  • keep the right people
  • managing ppls knowledge: knowledge need to be stored so it can be shared efficiently
95
Q

Why is technology good for some businesses

A

It helps businesses become more capital intensive, more efficient and can change the nature of the production process

96
Q

What is the main application of robotics

A

Can be programmed to carry out routine and increasingly complex activities

97
Q

What is automation

A

The use of machinery to replace HR

98
Q

what is computer aided manufacturing (CAM)

A

The use of computers to undertake activities such as planning, operating and controlling production

99
Q

What does the EPOS (electronic point of sale) system do

A

When an item is sold, the EPOS system adjusts sycon levels and can order new stock from suppliers automatically

100
Q

Give 3 advantages of IT in helping communication

A
  • helps a business improve internal and external communication
  • increases the speed of communication
  • due to the growing use of loyalty cards, orgs can accumulate info in buying habits of customers
101
Q

What is CAD

A

A computer software to design new products in 3D. It also includes programs to stimulate testing which can save money by eliminating production as testing of expensive prototypes

102
Q

What are the disadvantages of technology

A
  • expensive to introduce
  • needs for regular updating and servicing
  • for some businesses, the cost of tech can make them uncompetitive which can threaten their survival
  • staff have to undergo frequent training which is an added cost that threatens efficiency
103
Q

Name 4 tangible measures of quality

A
  • appearance
  • reliability
  • durability
  • functions and features
  • cost of ownership e.g. repairs
  • after sale service (cost, effectiveness)
104
Q

Name 3 intangible measures of quality

A
  • brand image
  • reputation
  • exclusiveness
105
Q

Give 6 reasons why high quality is important to a business

A
  • competitive advantage
  • can have a good impact on sales volume and therefore profit
  • can create a USP
  • allows businesses to increase their selling price
  • can reduce costs bc therese less waste from low quality products that need to be scrapped
  • brand loyalty
    -bad quality can damage reputation
106
Q

Give 2 business that use quality as their competitive advantage

A
  • marks and Spencer’s
  • apple
  • Waitrose
  • BMW
107
Q

Give two businesses that use both low price and quality while competing

A
  • Aldi
  • IKEA
  • Nando’s
  • Aldi
108
Q

What is quality control

A

The process of inspecting products to ensure they meet quality standard. You detect defective output rather than prevent it

109
Q

Give two benefits of quality control

A
  • can prevent defective products reaching customers = less bad reviews
  • a more secure system than one that trusts every worker to do their job properly
  • may detect common problems throughout an org = mistakes can be put right more efficiently
110
Q

Give 2 drawbacks of quality control

A
  • costly
  • placing responsibility for quality failure on inspectors = does little to encourage individuals to improve
  • inconsistent inspections
  • an expense that could be viewed as unnecessary of products produced ‘right first time’
111
Q

What is quality assurance

A

A system that aims to achieve/ improve quality by organising every process to get product ‘right first time’ and prevent mistakes happening. It builds quality in.

112
Q

Give two benefits of quality assurance

A
  • sense of ownership rests with workers - herzberg argues this has a positive effect on motivation
  • costs reduced - less waste and less need to rework products
  • staff responsible for quality = higher consistent level of quality
113
Q

What are the two systems of quality assurance

A
  • total quality management
  • kaizen
114
Q

What is the aim of total quality management

A

Aims to develop quality culture throughout a firm. Everyone is concerned with quality at every stage of production process

115
Q

What is kaizen

A

A process that is based on continuous improvement. This emerges from a corporate culture that encourages employees to identify possible way of improving the operation of the org

116
Q

Give 3 difficulties of improving quality

A
  • May be difficult to convince ppl there’s a problem
  • may be difficult agreeing on best solution
  • may be resistance to change
  • introducing new methods and retraining staff may be time consuming
  • keeping pace with change of customer cries on quality may be difficult
117
Q

Give 3 costs of improving quality

A
  • new training of staff
  • installing equipment for quality testing
  • employing inspection staff
  • introducing/ updating system
  • organising these of quality of inputs/ resources
118
Q

Give 3 examples of poor quality

A
  • product delivered late
  • product fails e.g. expected tear
  • product doesn’t perform as promised
  • poor instructions/ directions of use
119
Q

How might poor quality be measured

A
  • warranty claims
  • market surveys
  • product returns
  • profit margins
  • customer service rating
120
Q

To increase demand, you need to improve marketing mix
TRUE or FALSE

A

TRUE

121
Q

What should a business do if they have a capacity shortage and high demand

A

Charge higher prices in order to reduce demand and therefore maximise sales revenue

122
Q

When demand is low, is machinery a worthy or unnecessary expense

A

Unnecessary expense

123
Q

What are the main 3 approaches to increasing supply

A
  • producing to order
  • use of temporary & part time workers
  • outsourcing
124
Q

Is producing to order a ‘pull’ or ‘push’ method of production

A

Pull method

125
Q

What type of products does producing to order cover

A

Small-scale, tailor made products and large-scale one off planes whereby the basic model is determined but layout and fittings modified according to wishes of customer

126
Q

Give 3 advantages of producing to order

A
  • ability to supply product that meets customers exact specification = increased customer satisfaction and brand loyalty
  • reducing costs of holding inventory
  • potential for higher prices
  • production planning easier - org doesn’t need to employ staff to forecast demand and less need for staff to persuade ppl to buy products
  • it’s an extension of lean production methods
  • able to modify basic basic products to target mass markets and niche markets
127
Q

Give 3 disadvantages of producing to order

A
  • fluctuations in production levels overtime
  • higher costs due to inefficient capacity utilisation
  • customer has unexpected demand in product = impossible to meet demand quickly = sale lost
  • pressure of suppliers and employees bc of level of flexibility required
  • culture of continuous improvement needs to be in place BEFORE
128
Q

Name 3 factors that have to be considered when producing to order

A
  • effect on staff
  • impact on cost
  • flexibility of capacity
  • value to customer of customised product in comparison to standardised product
  • cost of stockouts bc it can lead to loss of sales and loss of goodwill
  • willingness if customer to wait for product to be completed
129
Q

Why is it inefficient to employ temporary workers full time when additional staff are needed

A

For most of the year they would have little to do

130
Q

Give two advantages of temporary and part-time employees

A
  • efficient way to keep costs down in areas where full time staff not necessary
  • flexibility- business able to respond to changes in demand more easily
  • if part-time work suits employees = more motivated and absenteeism reduced
131
Q

Give two disadvantages of temporary/part-time employees

A
  • May involve higher staffing costs as a result of paying fees to agencies and extra training and administrative costs
  • staff may be less loyal and committed to business
132
Q

What is outsourcing

A

The transfer of activities which were previously conducted in-house to a third party (outside of business)

133
Q

What is subcontracting

A

When another business takes an assigned task/part of a task from another business under contract

134
Q

Why do businesses use outsourcing

A

To reduce capacity utilisation problems

135
Q

Give two advantages of subcontracting/outsourcing

A
  • can react to changes in demand quickly
  • specialisation can be bought in more efficiently than doing it themselves

-easier it achieve non standard orders w/out disruption to production line

136
Q

Give two disadvantages of subcontracting/outsourcing

A
  • no direct control over quality of products
  • profit margins may be affected
  • parents and methods of production may have to be shared w/ subcontractor
  • too much subcontracting can damage businesses operation bases
137
Q

What are the three main influences on the amounts of inventory held

A
  • need to satisfy demand
  • need to manage working capital
  • risk of inventory losing value
138
Q

Give 4 key reason to hold inventory

A
  • precaution against delays from supplier
  • provide buffer between production process
  • to enable production to take place
  • it allows efficient production
  • allows for seasonal changes
  • satisfying customer demand
139
Q

What are the 4 costs of holding inventory

A
  • cost of storage
  • interest stock
  • obsolescence cost
  • ‘stock out’ costs
140
Q

Give 3 advantages of high inventory control

A
  • customer demand met quick
  • no loss of goodwill caused by running out of inventory
  • benefit from bulk buying = lower unit costs
  • production lines not halted
  • sudden increase in demand dealt w/ quickly
141
Q

Give 3 advantages of low inventory levels

A
  • reduced warehouse costs
  • products becoming out of date minimised
  • security and pilferage (theft) costs lower
  • cash flow problems due to cash being tied up in inventory less probable
142
Q

What is an inventory control chart

A

A diagram showing that’s used to register levels of stock/inventory over a period of time

143
Q

Name all the key parts of an inventory control chart

A
  • maximum level
  • reorder level
  • lead time
  • minimum inventory level
  • buffer stock
144
Q

What is lead time

A

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

145
Q

What is the buffer stock

A

An amount of inventory held as extras in case of unexpected orders so that they can be met and in care of any delays from suppliers

146
Q

What is the reorder level

A

The reorder level acts as a trigger point (when inventory falls to this level, next order should be placed)

147
Q

What 3 factors does the reorder level depend on

A
  • supplier lead time (how long it takes for suppliers to deliver order)
  • demand for product (high demand = high reorder level)
  • consequences of running out of inventory
148
Q

What is inventory rotation

A

Warehouses are designed so new inventory doesn’t block access to older inventory = avoids chance of product perishing

149
Q

Give 3 reasons why suppliers are important

A
  • to meet needs and wants of customers, business needs effective ‘supply chain’
  • supports determine many costs of business
  • suppliers closely linked with product quality
  • business that uses lean production - effective relationship = essential
150
Q

Give 4 factors that determine what makes an effective supplier

A
  • prices
  • payment terms
  • quality
  • capacity
  • reliability
  • flexibility
151
Q

What is vertical integration

A

Business strategy in which a company takes ownership of two or more key stages of its supply chain

152
Q

Why is vertical integration good for suppliers

A

Guarantees reliability, quality and flexibility of suppliers

153
Q

What is a strategic supplier

A

Suppliers which businesses can not succeed without maintaining an effective supplier relationship. Their goods and services are crucial to business success

154
Q

What is a commodity supplier

A

suppliers that provides good and services that can easily be bought elsewhere and which are not hugely important to business

155
Q

Why is effective management of supply chain important

A

It leads to greater customer satisfaction and business can achieve corporate aims e.g. making profit

156
Q

What is a supply chain

A

A network of sellers of raw materials, manufacturers that transform those materials into products and wholesalers and retailers who get those products to customers

157
Q

How can effectiveness and efficiency of a supply chain be measured

A

By its contribution towards achievement of firms operational objectives

158
Q

What is the traditional approach to supply chain management

A

A policy of buying huge quantities in order to get the lowest possible price. Businesses would try to ensure supplies were sourced as cheaply as possible and have sufficient quality

159
Q

What is the modern approach to supply chain management

A

Buying smaller quantities from a number of different suppliers which increases flexibility

160
Q

What two ways does Michael Porter say a business can gain a competitive advantage

A
  • cost advantage
  • differentiation
161
Q

Give 5 factors that influence a business’ decision to outsource

A
  • available capacity
  • expertise
  • quality considerations
  • nature of demand
  • cost
  • level of risk
  • impact on profit
162
Q

3D printing

A
163
Q

3D printing

A

Business (8 decks)

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