Making operational decisions to improve performance: managing inventory and supply chains

Question 1

What is producing to order

Answer 1

a business production strategy that typically allows consumers to purchase products that are customized to their specifications.

Question 2

What are 3 ways of matching supply to demand?

Answer 2

• outsourcing
• use of temporary and part time employees
• producing to order.

Question 3

Influences on amount of inventory held

Answer 3

interpreting inventory control charts

• lead time
• re-order levels
• buffer level of inventory
• re-order quantities.

Question 4

Disadvantages of holding buffer stock

Question 5

Advantages of holding buffer stock

Answer 5

• Negotiate a better deal with suppliers>if we have buffer stock it is likely we are purchasing large quantities>purchasing economies of scale
• Manage uncertainty- we have extra stock we can reach into where we see unexpected rises in demand

Question 6

Advantages of outsourcing

Answer 6

Reduce costs>if supplier if able to supply at a lower cost i.g through economies of scale
-access specialist suppliers with greater capabilities and higher quality

Question 7

Disadvantages of outsourcing

Question 8

Benefits to part time/temp employees

Answer 8

-can be useful for periods where there a sudden surge in demand
-cheaper>paid hourly and not a salary>lower labour costs
-flexibility>business schedule when exactly we want or need them
-

Question 9

Disadvantages of part time/temporary workers

Answer 9

• Part time so they only work there as it fits their lifestyle>less loyal>less motivated
• more part time workers mean higher span of control(more subordinates)>it is more work for the manager>could impact communication throughout the business
• lower staff retention>will need to train more workers>more costs for business to train workers and recruit them too. decreased profits

Question 10

Influences on the choice of suppliers

Answer 10

Price-may go for a supplier who wants lower prices (though this COULD comprimise on quality)

Question 11

Influences on the choice of suppliers

Answer 11

Price-may go for a supplier who wants lower prices (though this COULD comprimise on quality)
-Reliability- want someone who will provide when you need them to

Question 12

Important of efficiency

Answer 12

labour costs usually one of the largest costs for a firm>keeping it low keeps increased profits
>

Question 13

Two methods of improving quality

Answer 13

quality assurance

quality control

Question 14

Quality assurance features

Answer 14

Quality assurance-focusses on the prevention of defects during production process.
Is a process based approach
Manages quality during each step of the production process.

Question 15

Quality control features

Answer 15

Focusses on the identification of defects
Reactive process
Product based approach
Verify the quality before a good is sent off