Unit 4 (operations management) Flashcards
Factory Manager
Responsible for quantity and quality of products coming off a production line; maintenance of the line and necessary repairs
Purchasing manager
Responsible for providing material components required for production
Research and development manager
Responsible for the design and testing of new production processes and products.
Production
The process of converting inputs such as land, labour and capital into saleable goods
Productivity
A measure of the efficiency of input used in the production process, especially labour and capital.
Labour productivity calculation
Total output / number of production workers
Inventory
The stock of raw materials, work in progress and finished goods held by a business.
Economies of scale
The reduction in average costs as a result of increasing the scale of operations
Diseconomies of scale
Factors that cause average costs to rise as the scale of operations increases.
Fixed costs
Costs that do not change with output. E.g rent, the salary of a manager
Variable costs
Costs that change in direct proportion to output. E.g raw materials
Total costs calculation
Fixed cost + Variable cost
Average total cost calculation
Total cost of production / quantity of units produced
Break even
The level of output where revenue equals total cost and the business is making neither profit nor loss.
Break-even output calcuation
Fixed cost / Contribution per unit
