Unit 4 (operations management)

Question 1

Factory Manager

Answer 1

Responsible for quantity and quality of products coming off a production line; maintenance of the line and necessary repairs

Question 2

Purchasing manager

Answer 2

Responsible for providing material components required for production

Question 3

Research and development manager

Answer 3

Responsible for the design and testing of new production processes and products.

Question 4

Production

Answer 4

The process of converting inputs such as land, labour and capital into saleable goods

Question 5

Productivity

Answer 5

A measure of the efficiency of input used in the production process, especially labour and capital.

Question 6

Labour productivity calculation

Answer 6

Total output / number of production workers

Question 7

Inventory

Answer 7

The stock of raw materials, work in progress and finished goods held by a business.

Question 8

Economies of scale

Answer 8

The reduction in average costs as a result of increasing the scale of operations

Question 9

Diseconomies of scale

Answer 9

Factors that cause average costs to rise as the scale of operations increases.

Question 10

Fixed costs

Answer 10

Costs that do not change with output. E.g rent, the salary of a manager

Question 11

Variable costs

Answer 11

Costs that change in direct proportion to output. E.g raw materials

Question 12

Total costs calculation

Answer 12

Fixed cost + Variable cost

Question 13

Average total cost calculation

Answer 13

Total cost of production / quantity of units produced

Question 14

Break even

Answer 14

The level of output where revenue equals total cost and the business is making neither profit nor loss.

Question 15

Break-even output calcuation

Answer 15

Fixed cost / Contribution per unit

Question 16

Contribution per unit (CPU)

Answer 16

Selling price per unit - Variable cost per unit

Question 17

Total contributions calucation

Answer 17

Total revenue - Variable costs

Question 18

Margin of safety calculation

Answer 18

Actual level of output - break-even output

Question 19

Quality

Answer 19

Ensuring a good or service that is free from defects and meets the needs and requirements of its consumers

Question 20

Quality Control

Answer 20

The method businesses use to check the quality of products through inspection.

Question 21

Quality Assurance

Answer 21

A system of selling agreed standards for every stage of production

Question 22

Lean production

Answer 22

Aims to lower the costs of production by reducing waste to a minimum while maintaining or improving the quality of the finished product.

Question 23

What are the two types of lean production

Answer 23

• Just-in-time inventory control

- Kaizen

Question 24

Just-in-time inventory control

Answer 24

This system means that no inventories are held by the business.

Question 25

Kaizen

Answer 25

Gives all workers the opportunity to make suggestions about how to improve quality or productivity.

Question 26

What are the main methods of production?

Answer 26

Job production Batch production Flow production

Question 27

Job production

Answer 27

An individual item is completed before another is started - normally used for unique/niche items - needs highly specialised/skilled workers

Question 28

Batch production

Answer 28

A group of items are completed at one stage of the production process at a time, through to completion - e.g a bakery

Question 29

Flow production

Answer 29

Involves moving continuously along a production line - at each stage, additional features are added until the production reaches its final state - Usually where a large output of identical products is required to meet high customer demand - e.g chocolate bars or cars