Unit 4 (Operations) Flashcards
Decision making to improve operational performance
What are some operational objective focuses?
Reduce unit costs
Quality targets
Speed of response and flexibility
Dependability
Environmental objectives
What is the capacity utilisation formula?
Actual output/maximum possible output x 100
Labour productivity formula?
Output/number of employees
Unit costs formula?
Total cost/units of output
How can you increase labour productivity?
Invest in technology
Improvement in training and motivation
Reduction in labour force (only if same level of output can be maintained)
What is JIT and what are its benefits and drawbacks?
An inventory strategy where stock is received only when they are needed in the production process
- Reduce waste
- Reduce space and staff due to less warehousing
- Greater flexibility
- Lower costs
Cannot take advantage of purchasing economies of scale
Could argue less flexibility in terms of surges in demands
Requires a very strong relationship with suppliers
What can determine used of capital intensive production vs labour intensive?
- Finance
- High Fixed costs ( for capital intensive)
- Maintenance and upkeep
- Cost of labour depending on the country
- nature of the job (does it need highly skilled workers like where meeting customer needs is a top priority)
What sort of technology is used in operations?
More advanced computer systems e.g automatic stock control systems
Computer-aided manufacture (CAM) - where manufacturers use robots as a part of the production process.
Computer-aided design - which can be linked to CAM systems.
What are benefits of new and updated technology?
Reduces unit costs of productions e.g publishers can electronically send books overseas.
For high technology products like games consoles, there’s opportunity to charge a premium price, like price skimming is likely to boost profits.
Access to new markets
What are benefits to quality?
Provide a USP
Allow a business to charge higher prices, increase profit margins
Enable a business to increase its sales
Enhance reputation and brand loyalty
What is the difference between Quality Control and Quality Assurance?
Quality control - focusses on inspecting on final products to remove any poor quality ones
Quality Assurance - focuses on making sure there is never any poor quality by improving production processes
What are some characteristics of TQM?
Focus on customer needs
continuous improvement
employee involvement and empowerment
managing suppliers
What is the supply chain?
The whole process of getting a good or service to the consumer.
- the supply of materials to the manufacturer
- the manufacturing process
- the distribution of the finished goods to the consumer
What is flexibility?
The ability of a business to meet a customer’s requirements.
What is mass customisation?
The production of custom tailored foods or services to meet customers needs. E.g in the car industry the customer can choose the colour, paint, trim, accessories etc.
What are some influences on the amount of inventory held?
Nature of the product
Nature of production
Nature of demand
Opportunity cost
What are the key features of an inventory control chart?
Buffer level of inventory
Reorder level
Lead time
Maximum stock level
Reorder quantity
What are the benefits and drawbacks of outsourcing?
Can have 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
- Quality may suffer
- Reliability of supplied may not be guaranteed
It is likely to be more costly than producing in house
How can you calculate the reorder level?
Reorder Level = (Average Demand per Day × Lead Time in Days) + Buffer Stock
What is quality assurance and what are the benefits and drawbacks?
Making sure every stage of production is of the best quality.
What is Kaizen?
Continuous improvement, where all employees are encouraged to identify and suggest possible improvements in the production process.
What is TQM?
A culture of quality throughout the organisation, places collective responsibility for high quality.
- Focusing on customer needs.
- Continuous improvement
- Employee involvement and empowerment
- Managing suppliers
What is outsourcing?
Another business (third party) is contracted to procure the extra goods required in order to satisfy the demand.
e.g outsourcing call centres, production.
What influences the amount of inventory held?
Nature of the product
- Foolish to hold large stocks of perishable goods.
Nature of production
- A JIT method a production means that lower levels of stock are held.
Nature of demand
- Seasonal products may require a higher level of stock to be held than those that have regular demand
Opportunity cost
- Money tied up in stock represents an opportunity cost and could be better used somewhere else.
What are the benefits and drawbacks of outsourcing?
Quicker response to increase in demand
Greater dependability in periods of increase demands
Quality may suffer
Reliability of supplies may not be guaranteed
It is likely to be more costly than producing in-house.
