Unit 4 - Operations Flashcards
What acronym is used for what good objectives should be?
SMART
What is labour productivity?
The amount of output per employee
How is labour productivity calculated?
Total output/number of employees
What are the 4 main areas for operational objectives?
Labour productivity, capacity, capacity utilisation and unit costs
What is capacity utilisation?
This measures what percentage of the maximum possible capacity is being used
How do you calculate capacity utilisation?
Actual output/max possible output X100
Why might it be difficult for some firms to accurately calculate unit costs?
They may sell a number of different products.
What is the best capacity utilisation for a firm to have?
Around 90%, close to 100% but leaving enough spare capacity in case of problems and for flexibility
How can a business increase efficiency?
Increase labour productivity
Invest in tech
Job redesign
Why might it be hard to increase efficiency?
Employers may resist without pay rises
There may be costs of improving efficiency
What is lean production?
It is about getting more from less and minimising waste
What is just-in-time production?
Where materials are received just as they are needed for production
What is time-based management?
It aims to reduce time wasted in operations, such as shorter lead times
What is TQM?
An idea of quality assurance where all workers have responsibility for getting it right for time
Why is TQM more effective for a business than quality check teams like with Henry Ford?
It reduces costs by cutting out problems and stopping products having to go back to the beginning of the production line
What is Kaizen?
This is the idea of individual workers making small changes on a regular basis
What is quality assurance?
Making sure quality needs are met
Name 3 benefits of improving quality
- more (potentially) brand loyalty
- less costs from having to dive things again
- a USP
Name 3 consequences of poor quality
- loss of reputation
- increased costa from having to do things again
- potential problems with laws and regulations depending on product being sold
For which kind of firms might quality and quality improvement be the most important objective?
- firms selling luxury goods
- firms in competitive markets -USP
Name 3 influences on the amount of inventory held
- the nature of the product
- nature of demand, e.g. Seasonal?
- opportunity cost of holding stock
What is buffer inventory?
The minimum amount of stock a business wants to hold
What is the reorder level?
The level of stock at which a new order is placed. This will depend on lead times.
What does ‘lead time’ mean?
The time it takes between an order being placed and the stock being delivered
