Unit 4 - Operations

Question 1

What acronym is used for what good objectives should be?

Answer 1

SMART

Question 2

What is labour productivity?

Answer 2

The amount of output per employee

Question 3

How is labour productivity calculated?

Answer 3

Total output/number of employees

Question 4

What are the 4 main areas for operational objectives?

Answer 4

Labour productivity, capacity, capacity utilisation and unit costs

Question 5

What is capacity utilisation?

Answer 5

This measures what percentage of the maximum possible capacity is being used

Question 6

How do you calculate capacity utilisation?

Answer 6

Actual output/max possible output X100

Question 7

Why might it be difficult for some firms to accurately calculate unit costs?

Answer 7

They may sell a number of different products.

Question 8

What is the best capacity utilisation for a firm to have?

Answer 8

Around 90%, close to 100% but leaving enough spare capacity in case of problems and for flexibility

Question 9

How can a business increase efficiency?

Answer 9

Increase labour productivity
Invest in tech
Job redesign

Question 10

Why might it be hard to increase efficiency?

Answer 10

Employers may resist without pay rises

There may be costs of improving efficiency

Question 11

What is lean production?

Answer 11

It is about getting more from less and minimising waste

Question 12

What is just-in-time production?

Answer 12

Where materials are received just as they are needed for production

Question 13

What is time-based management?

Answer 13

It aims to reduce time wasted in operations, such as shorter lead times

Question 14

What is TQM?

Answer 14

An idea of quality assurance where all workers have responsibility for getting it right for time

Question 15

Why is TQM more effective for a business than quality check teams like with Henry Ford?

Answer 15

It reduces costs by cutting out problems and stopping products having to go back to the beginning of the production line

Question 16

What is Kaizen?

Answer 16

This is the idea of individual workers making small changes on a regular basis

Question 17

What is quality assurance?

Answer 17

Making sure quality needs are met

Question 18

Name 3 benefits of improving quality

Answer 18

• more (potentially) brand loyalty
• less costs from having to dive things again
• a USP

Question 19

Name 3 consequences of poor quality

Answer 19

• loss of reputation
• increased costa from having to do things again
• potential problems with laws and regulations depending on product being sold

Question 20

For which kind of firms might quality and quality improvement be the most important objective?

Answer 20

• firms selling luxury goods

- firms in competitive markets -USP

Question 21

Name 3 influences on the amount of inventory held

Answer 21

• the nature of the product
• nature of demand, e.g. Seasonal?
• opportunity cost of holding stock

Question 22

What is buffer inventory?

Answer 22

The minimum amount of stock a business wants to hold

Question 23

What is the reorder level?

Answer 23

The level of stock at which a new order is placed. This will depend on lead times.

Question 24

What does ‘lead time’ mean?

Answer 24

The time it takes between an order being placed and the stock being delivered

Question 25

What might a business consider when choosing their suppliers?

Answer 25

• costs
• location of supplier (could mean different costs and led times)
• capacity of supplier and their potential to match potentially higher future demand from the business
• their reliability
• their flexibility
• the ethics of the suppliers as it could have an effect on the business purchasing from them

Question 26

What is outsourcing?

Answer 26

Paying another firm to part of your firms’ work for you

Question 27

What are the advantages of outsourcing?

Answer 27

• cuts costs potentially (means you don’t have to expand and buy new equipment)
• firm may be specialist
• may enable quicker responses from the firm if they have good relations with the firm they have outsourced to. This is also because the business is not trying to do everything itself.

Question 28

What are the drawbacks of outsourcing?

Answer 28

• may cost a lot
• may be issues with quality
• if there are any problems with the work done by the firm it could impact on the reputation of the business.