23 - making operational decisions

Question 0

Capacity

Answer 0

The maximum output that a firm can produce with existing resources.

Question 1

Operational Targets

Answer 1

These are specific and usually measurable objectives set for each operations activity of a business.

Question 2

Capacity utilisation

Answer 2

This is the proportion that current output is of full capacity output.

Current output
Maximum output X 100

Question 3

Unit cost

Answer 3

Is average cost per unit of output.
Unit cost = total cost
Output

Question 4

Excess capacity

Answer 4

When a business has greater production capacity that is likely to be used in the foreseeable future.

Question 5

Overtime

Answer 5

Staff working beyond their contracted hours in exchange for higher hourly wage.

Question 6

Temporary staff

Answer 6

Workers employed for a fixed period of time after which the employment contract may not be renewed.

Question 7

Part-time Staff

Answer 7

Workers employed in a less that full weekly hours contract - e.g. 15 hours per week.

Question 8

Sub-contracting

Answer 8

Using a supplier to manufacture part or all of a firms product or service.

Question 9

Stocks

Answer 9

Materials or finished goods held by a firm as needed to supply customers demand.

Question 10

Rationalisation

Answer 10

Reorganising resources to cut costs - often leading to a cut back in capacity.