AOS 3: Operations Management

Question 1

Operations management & FEATURE & FOCUSES

Answer 1

Operations management involves coordinating and organising the activities involved in producing the goods or services that a business sells to customers.

FEATURE: Operations managers are responsible for implementing operations strategies, such as quality control, that improve the efficiency and effectiveness of a business’s operations system

FOCUSES: customer service, productivity, waste minimisation, speed of delivery

Question 2

Efficiency
VS Effectiveness

DISTINGUISH

Answer 2

Efficiency is how productively a business uses its resources when producing a good or service.

Effectiveness is the extent to which a business achieves its stated objectives.

DISTINGUISH: efficiency solely focuses on how productive a business’s operations system is, whereas effectiveness analyses how well a business’s operations system achieves set objectives.

Question 3

The relationship between operations management and the business objective of TO MAKE A PROFIT

Answer 3

How the strategy assists the achievement of business objectives:
Reduces the number of employees required in the operations system, which can reduce expenses associated with labour and therefore increase profit.

Possible operations strategy:
Implementing technology into the production process.

Question 4

The relationship between operations management and the business objective of TO MEET SHAREHOLDER EXPECTATIONS

Answer 4

How the strategy assists the achievement of business objectives:
Increases online sales, which can lead to higher levels of profit and increase dividends for shareholders.

Possible operations strategy:
Creating a website for customers to purchase goods and services online.

Question 4

The relationship between operations management and the business objective of TO INCREASE MARKET SHARE

Answer 4

How the strategy assists the achievement of business objectives:
Can improve the quality of a business’s product, increasing customer satisfaction and the business’s proportion of sales within its industry.

Possible operations strategy:
Checking that products produced are not faulty.

Question 5

The relationship between operations management and the business objective of TO FULFIL A MARKET NEED

Answer 5

How the strategy assists the achievement of business objectives:
Can design innovative products to fulfil customer needs that are currently unmet or underserved
in the market.

Possible operations strategy:
Using technology to design new products.

Question 5

The relationship between operations management and the business objective of TO FULFIL A SOCIAL NEED

Answer 5

How the strategy assists the achievement of business objectives:
Reduces the amount of waste produced by a business, allowing it to meet the social need of environmental preservation.

Possible operations strategy:
Ensuring that any waste is recycled in the production process.

Question 6

The relationship between operations management and the business objective of TO IMPROVE EFFICIENCY

Answer 6

How the strategy assists the achievement of business objectives:
Can increase a business’s productivity in terms of production speed, as well as reducing the number of resources discarded in the production process.

Possible operations strategy:
Using technology to automate the production process.

Question 7

The relationship between operations management and the business objective of TO IMPROVE EFFECTIVENESS

Answer 7

How the strategy assists the achievement of business objectives:
Can improve levels of customer satisfaction, which may increase the business’s sales and revenue. Increased financial performance can assist the business in achieving its objectives.

Possible operations strategy:
Implement strategies that improve the quality of the business’s product.

Question 8

Inputs & FEATURE & EXAMPLES

Answer 8

Inputs are the resources used by a business to produce goods and services.

FEATURE: Operations managers are responsible for sourcing inputs that allow a business to produce the highest quality product at the lowest possible cost.

EXAMPLES: time, information and knowledge, the equipment/machinery and labour resources used in the production process.

Question 8

Processes & FEATURE & EXAMPLES

Answer 8

Processes are the actions performed by a business to transform inputs into outputs.

FEATURE: These actions could include designing a product, assembling different components, or packaging a product

EXAMPLES: ending in -ing:
Storing, sorting, blending, packing, sending, filling, packaging

Question 9

Outputs & FEATURE & EXAMPLES

Answer 9

Outputs are the final goods or services produced as a result of a business’s operations system, that are delivered or provided to customers.

FEATURE: An operations manager should ensure that a business’s outputs meet customer expectations relating to the quality, price, and availability of the product.

EXAMPLES: results:
eg. baked goods, bottles etc.

Question 10

Manufacturing businesses & FEATURE & EXAMPLE

Answer 10

Manufacturing businesses use resources and raw materials to produce a finished physical good.

FEATURE: A manufacturing business that produces goods will have processes that involve a low degree of customer contact, as production typically takes place in an environment separate from where customer consumption occurs

EXAMPLE: Yakult

Question 10

Service businesses & FEATURE & EXAMPLE

Answer 10

Service businesses provide intangible products, usually with the use of specialised expertise. Services are intangible products that are provided by individuals with specialised expertise.

FEATURE:

EXAMPLE: Qantas

Question 11

Characteristics of operations management within a service business

Answer 11

One characteristic of operations management at a service business is that outputs provided to customers are intangible, meaning they cannot be touched.
Moreover, another characteristic is that outputs produced by a service business cannot be stored as inventory

Question 11

Difference between the operations management of a manufacturing business and a service business

Answer 11

One characteristic of a manufacturing business’s operations is that the outputs produced are tangible goods, meaning that they can be touched.
In contrast, a service business produces outputs of an intangible nature, as the service provided cannot be touched.

Question 12

Compare the characteristics of operations management within a manufacturing business with those of a service business.

Answer 12

One similarity between the operations of a manufacturing business and the operations of a service business, is that operations managers at both businesses would aim to improve the efficiency and effectiveness of the operations system.
Furthermore, another similarity is that operations managers at a manufacturing and at a service business both will deal with suppliers in the process of sourcing inputs for production.

However, manufacturing businesses produce outputs that are tangible, meaning the goods produced can be physically touched. This differs from a service business’s operations system, which produces outputs of an intangible nature, such as a doctor, which cannot be physically touched.
Moreover, another difference is that the goods produced by manufacturing businesses are able to be stored as inventory, whereas a service business produces outputs that are unable to be stored as inventory, such as a haircut.

Question 13

Similarities and Differences: Manufacturing VS Service

Answer 13

Sim:
- both aim to optimise their operations to produce high-quality outputs at a low cost of production

• both have to deal with suppliers during the process of managing operations
• both can utilise forms of technology in their operations
  systems

Diff:
manu- capital intensive
serv- labour intensive

manu- tangible
serv- intangible

manu- low degree of customer contact during production
serv- high degree of customer contact during production

Question 13

Characteristics of:
Manufacturing VS Service

Answer 13

Manufacturing:
- Manufacturing business are likely to have highly automated processes that are capital intensive (a high degree of machinery and equipment)
- Manufacturing businesses often have a low degree of customer contact during production, as the production stage is separated from consumption.
- The outputs produced by a manufacturing business are tangible

Service:
- Service businesses are likely to have production process that’s are labour intensive (a high degree of employee involvement during its production process)
- Service business tend to have a high degree of customer contact during production as it occurs simultaneously with consumption
- The outputs produced by a service business are intangible

Question 13

Characteristics of manufacturing businesses: Yakult

Answer 13

• Manufacturing processes performed in Yakult’s factories are capital intensive, with a high degree of machinery and equipment used in its production process.
• There is a low degree of customer contact during production, as Yakult’s production and consumption occur separately.
• Bottles of Yakult Original and Yakult Light are tangible and can be stored as inventory.
• The production of each Yakult product is standardised, meaning every bottle is consistent with the
  business’s standards and identical to one another.

Question 14

Characteristics of service businesses: Qantas

Answer 14

• Processes performed to provide flights are labour intensive, with a high degree of labour resources used during the production process. This labour includes pilots and cabin crew who work during the flight.
• There is a high degree of customer contact with passengers during the production process, as production and consumption of flights occur simultaneously.
• The flight service provided is intangible and cannot be stored as inventory.
• The flight service provided is tailored specifically to individual customer needs as they are able
  to choose their destination, in-flight meals, and seat size.
  agreement.

Question 14

Automated productions lines & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 14

Automated production lines involve machinery and equipment that are arranged in a sequence, and the product is developed as it proceeds through each step.

EFFICIENCY: Automated production lines can perform at speeds much faster than humans, reducing the amount of time taken to produce outputs, thus improving productivity.

EFFECTIVENESS: Automated production lines perform tasks with a high degree of accuracy, which can decrease the number of errors that occur during production. Reducing errors in production can enhance the overall quality of the final product, which can increase customer satisfaction, sales, and market share.

PROS:
1. Performing tasks precisely and accurately can ensure products are consistently produced at a high standard, which can improve the business’s reputation
2. The number of employees needed for production can be minimised, which can reduce a business’s wage expenses.

CONS:
1. A business may develop a poor reputation if it implements technology that makes employees redundant
2. There are high initial setup costs associated with purchasing and installing automated production lines.

Question 15

Robotics & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 15

Robotics are programmable machines that are capable of performing specified tasks.

FEATURE: Robotics can be used within a business’s operations system to perform tasks faster and more accurately than human labour.

EFFICIENCY: Robotics can perform specific tasks quickly and with high levels of accuracy. This can reduce the amount of time and resources wasted in production, therefore resources are used more optimally, improving productivity.

EFFECTIVENESS: Robotics can perform specified tasks quickly with high levels of precision, which can minimise the number of errors that occur during production. This can enhance the overall quality of the final product and increase customer satisfaction, sales, and market share.

PROS:
1. Performing tasks precisely and accurately can ensure products are consistently produced at a high standard, which can improve the business’s reputation
2. The number of employees needed for production can be minimised, which can reduce a business’s wage expenses.

CONS:
1. A business may develop a poor reputation if it implements robotic technology that makes employees redundant
2. There are high initial setup costs associated with purchasing, programming, and installing robotics.

Question 16

Computer Aided Design (CAD) & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 16

Computer-aided design is digital design software that aids the creation, modification, and optimisation of a design and the design process.

FEATURE: …

EFFICIENCY: CAD can reduce the time and labour needed to design a product, allowing resources to be used more optimally and productively.

EFFECTIVENESS: A business can use CAD to develop various prototypes and choose the best design to produce. Choosing the best option enables the business to manufacture the highest quality design, which can increase customer satisfaction, sales, and market share.

PROS:
1. Greater accuracy in the product design process can result in consistent levels of quality which can improve the business’s reputation
2. Improved accuracy can ensure products are consistently produced at a high quality, which can increase customer satisfaction and a business’s number of sales.

CONS:
1. The implementation of CAD may cause fewer employees needed in the design process of a product, which may result in redundancies
2. There are high initial setup costs associated with purchasing and installing CAD software.

Question 17

Computer Aided Manufacturing (CAM) & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 17

Computer-aided manufacturing (CAM) techniques involve the use of software that controls and directs production processes by coordinating machinery and equipment through a computer.

FEATURE: CAM allows machines, equipment, and tools used in production to be given specified instructions and then automatically complete their function.

EFFICIENCY:
* CAM can follow specific instructions and complete tasks more accurately than humans which can reduce the amount of waste that is generated during production, and therefore optimise a business’s use of resources.

EFFECTIVENESS: CAM software is able to coordinate tasks so they are performed with a high degree of accuracy, enabling the business to achieve a consistent level of quality, which can increase customer satisfaction, sales, and market share.

PROS:
1. Improved accuracy allows for high- quality products to be consistently produced, which can improve the business’s reputation
2. Improved accuracy can enhance product quality and increase customer satisfaction, which can increase sales revenue.

CONS:
1. The business may develop a poor reputation if the CAM software makes numerous employees redundant
2. There are high initial setup costs associated with purchasing and installing CAM software.

Question 18

Artificial Intelligence (AI) & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 18

Artificial intelligence involves using computerised systems to simulate human intelligence and mimic human behaviour.

FEATURE: Artificial intelligence can be utilised within a business’s operations systems to conduct tasks that would typically require human intelligence, such as data analysis or speech interpretation.

EFFICIENCY: AI can reduce the time and labour used to complete complex tasks that would usually require human intelligence. This can allow resources to be used more optimally and improve productivity.

EFFECTIVENESS: AI can perform complex tasks, such
as providing timely and high-quality customer assistance. This can improve customer satisfaction levels, and allow for increases in sales and market share.

PROS:
1. Artificial intelligence has the ability to provide prompt customer service 24/7, which can improve customer satisfaction and the business’s reputation
2. Improved accuracy can enhance product quality and increase customer satisfaction, which can increase sales revenue.

CONS:
1. The business may develop a poor reputation if artificial intelligence makes numerous employees redundant
2. There are high initial setup costs associated with purchasing and installing artificial intelligence.

Question 19

Online services & FEATURE & EFFICIENCY & EFFECTIVENESS & PROS/CONS

Answer 19

Online services are services that are provided via the internet.

FEATURE: …

EFFICIENCY: Online services can remove the need for employees to perform certain tasks and enable labour resources to be used more efficiently.

EFFECTIVENESS: Implementing online services within an operations system can improve convenience for customers, increasing levels of customer satisfaction, sales, and market share.

PROS:

CONS: