Unit 5: Operations Management Flashcards
Economic Sustainability
The need to use available resources and raw materials to their best advantage
Ultimately ensures profitability and financial performance
Social Sustainability
The need to take human factors into account both internally and externally when making business decisions
Ecological Sustainability
The need to take environmental factors into account when making business decisions (especially about nature and ecosystems)
Triple Bottom Line
The need to take economic, social and ecological factors into account when making decisions (the 3Ps)
Job Production
Production of a special “one-off” product made to a specific order
Tailored to each individual customer
Batch Production
Production of a group of identical products
Items in each group go together from one stage of production to the next
Mass Production
Production of a high volume of identical, standardised products
Mass Customization
Combines mass-production with the personalization of custom-made products for marketing purposes
Relatively low-cost while still maintaining some degree of customizability
Lean Production (HL)
A Japanese approach to operations management
Focuses on less waste and greater efficiency
Kaizen (HL)
A method of lean production based on continuous improvement
Just-in-Time (HL)
A method of stock control
Avoids holding stock by getting supplies only when necessary and producing only when ordered
Just-in-Case (HL)
A method of stock control
Involves holding reserves of both raw materials and finished products in case of a sudden increase in demand
Cradle-to-Cradle Manufacturing (HL)
A recent approach to design and manufacturing
Based on principles of sustainable development, especially recycling
Quality Control (HL)
Quality of products is assessed through an inspection after the production run has been completed
Production is rarely halted and a small percentage of products are allowed to fail
Quality Assurance (HL)
Quality of products is ensured by involving the entire organisation in overseeing quality
Production is halted often and zero defects are tolerated
Quality Circle (HL)
A formal group of employees who meet regularly
Discuss and suggest ways of improving quality in the organisation
Benchmarking (HL)
A tool for businesses to compare themselves to their competitors
Allows businesses to identify how they can improve their own operations and practices
Total Quality Management (HL)
An approach to quality enhancement that permeates the whole organisation
Can include quality circles and benchmarking
Outsourcing or Subcontracting
The practice of employing another business to perform some peripheral activities
This enables the organisation rto focus on its core activity
Offshoring
The practice of subcontracting overseas, or outsourcing outside the home country
Insourcing
The practice of performing peripheral activities internally, within the company
The opposite of outsourcing
Reshoring
The practice of bringing back business functions (jobs and operations) to the home country
The opposite of offshoring
Contribution per Unit
The difference between selling price per unit and variable cost per unit
Total Contribution
The difference between total sales revenue and total variable costs
Profit
Obtained by subtracting total fixed costs from the total contribution
The positive difference between total revenue and total costs
Break-Even Chart
A graphical method that measures the value of a firm’s costs and revenues against a given level of output
Break-Even Quantity
A measure of output where total revenue equals total costs
Margin of Safety
The output amount that exceeds the break-even quantity
Target Profit Output
The level of output that is needed to earn a specified amount of profit
