Business Sears- Operations Flashcards

Question

How to deal with over utilisation?

Answer 1

Increase capacity- expand the business/new staff/new machinery etc Subcontract the work out (means to give a contract for a 3rd party to produce goods under your name) Reduce demand- turn down work/ increase prices

Answer 2

When a business continues to grow (leading to increased output), the average costs rise. When a business is too big; control, communication and coordination slows the business down, which leads to a decrease in productivity, or an increase in mistakes

Answer 3

When a business increases its output, it leads to a fall in average costs e.g. Costco- buying in bulk, suppliers give a discount per unit, this leads to a fall in average costs, or, fixed costs are now spread between more units which leads to a fall in average costs

Answer 4

A Japanese management philosophy now adopted around the world. Aims to produce with maximum efficiency (Is a technology to improve operational efficiency)

Answer 5

Shorten the lead times (the time taken to get products from factory to shelf) Minimise waste of resources (time, raw materials, costs)

Answer 6

Just In Time Kaizen Total Quality Management

Answer 7

Having the right items of the right quality in the right place at the right time (replacing the idea of holding stock in a store room) Characteristics of JIT: Based on demand pull production- products are only made when there is demand so there is less waste Suppliers must be very responsive to orders- need good relationships with suppliers Fewer resources are held as stock- this reduces costs and increases work space

Answer 8

Means continuous improvement in Japanese, it tries to identity small ways to improve production Characteristics of Kaizen: Groups of employees (kaizen groups) meet to propose new ways to improve productivity Shop floor workers carry out the job so they have first hand knowledge of issues and how to solve them Small changes are easy to make and adopt so there is less impact on the workforce and costs Kaizen groups can be a source of innovative ideas

Answer 9

All employees should be continually focusing on ways to improve their workforce Workers feel motivated due to empowerment and having a hand in decision making

Answer 10

Workers need higher levels of training Workers must feel their ideas are actually being listened too (links to HR)

Answer 11

Lower costs- due to fewer resources being required or less waste . These lower costs help increase profits or reduce selling price Shorter lead times- means products can be developed more quickly so there is a shorter delivery time from design to reaching customers. This short lead time provides a competitive advantage as they are quicker to react to the market

Answer 12

There are fewer opportunities for bulk buying- as supply is more frequent but comes in smaller quantities- this can increase costs Halting of production- there is no inventory to fall back on if the supplier fails to deliver a component (JIT requires very reliable suppliers) There are undetected product faults- there is no time for a manufacturer to test for fault components beforehand

Answer 13

Excellent communications and high levels of cooperation and flexibility from suppliers Reliable and flexible employees who are prepared to modify their workloads to cope with increases in activity A flexible approach to managing workers I.e. employees see tangible benefits for their own greater flexibility Suitable equipment so machinery can be adapted quickly to changing needs

Answer 14

Quality is about meeting the needs and expectations of customers Customers want quality that is appropriate to the price they are prepared to pay and the level of competition in the market

Answer 15

Good design- looks and style Good functionality- it does the job well Reliable- acceptable level of breakdowns or failure Consistency Durable- last as long as it should Good after sales service Value for money

Answer 16

Quality control Quality assurance Total Quality Management

Answer 17

Quality inspectors check the quality of finished work

Answer 18

Advantages: Should stop defected products/ batches reaching the customer Can spot common mistakes and rectify them Disadvantages: No responsibility for staff to ensure quality There is an added expense of hiring controllers This system is no longer very popular

Answer 19

A system that aims to make sure that everyone is taking responsibility for quality- self checking rather than the need for inspectors

Answer 20

Advantages: Lower costs as more products are correct first time Workers are more highly motivated as giving them responsibility for ensuring quality can help motivate them Disadvantages: Need workers to be willing and be able to complete tasks to high quality Costs to train

Answer 21

Generate a higher level of repeat purchases Helps with brand building that can benefit new products (may be easier to launch new products) Can charge a premium price Makes it easier to get distribution in retail stores Positive reviews can help generate further sales

Answer 22

Bad reviews Bad reputation Higher costs of correcting issues Lower potential sales

Answer 23

Costs- increased costs of training staff, or of checking quality control, or the cost of higher quality raw materials Motivation- a lack of motivation decreases quality It is difficult to change the mindset of the public if the quality was low in the past e.g. Kia/ Lidl

Answer 24

Use of temporary or part time staff- temporary means work for certain periods e.g. Summer or Christmas work at a Christmas tree farm, part time means working all year but only certain hours e.g. extra workers for lunch in shifts in a cafe Producing to order- producing goods when there is a demand (an order is placed) e.g. cars/Lolas cakes Outsourcing- when a business uses an outside supplier/ provider for some of its goods or services

Answer 25

Benefits: Enables businesses to make use of specialist skills and services; may get better quality of work provided more efficiently Can increase capacity of the business (by getting some aspects of its provision by others) Drawbacks: Will be affected in terms of costs and quality of their supplier- may have adverse affects on the reputation of the business itself Businesses may be held accountable for the actions of its suppliers e.g. is the supplier ethical? A business will have to pay enough for the supplier to make a profit- may be more expensive than doing work in-house

Answer 26

Using queuing systems or introducing waitlists to manage high levels of demand Increasing prices to reduce demand Accepting orders to produce for others if demand is too low

Answer 27

Inventories are the raw materials, work-in progress and finished goods held by a firm to enable production and meet customer demand

Answer 28

Enable production to take place Satisfy customer demand Precaution against delays from suppliers Allow efficient production Allow for seasonal changes Provide a buffer between production processes

Answer 29

The need to satisfy demand (may be unpredictable/seasonal), failure to have goods for sale is very costly The need to manage working capital (holding inventories ties up cash in working capital, there is an opportunity cost associated with inventory holding) The risk of the inventory losing value (the longer stocks are held, the greater the risk they cannot be used or sold)

Answer 30

Cost of storage Interest costs Obsolescence risk (they may become unusable or incapable of being sold) Stock out costs (if you run out of stock of something popular and u cost restock bc other stuff are occupying stock)

Answer 31

The amount of time between placing the order and receiving the order

Answer 32

Finished goods Part finished goods Raw materials

Answer 33

Lower inventory holding costs e.g. storage Lower risk of inventory obsolescence Less capital (cash) tied up in working capital- can be used elsewhere in the business Consistent with operating “lean”

Answer 34

Lead time from supplier: - How long it takes for the supplier to deliver the order - Higher lead times may require a higher re-order level Implications of running out (stock outs) If stock outs are very damaging, they have a high re-order level & quantity Demand for the product: Higher demand normally means higher re-order levels

Answer 35

Production fully supplied- no delays Potential for lower unit costs by ordering in bulk/ high quantities Better able to handle unexpected changes in demand or need for higher output Less likelihood of “stock-outs”

Answer 36

Just in Case- holding inventories (buffer stock) can be known as ‘Just in Case’ Just in Time

Answer 37

Concept of Just in Time: - Inventory required for production arrived just as it is needed - Lean production= minimal capital tied up in inventories Implications: - No need for buffer stocks - Stock holding costs are minimised - Lead times are very short - Requires highly reliable suppliers & sophisticated IT systems of work properly

Answer 38

All the providers of resources (such as people, finance, machinery, equipment) at different stages of the operations process

Answer 39

What to produce yourself and what to buy from others? Which businesses to work with? How many suppliers should you work with? How do they treat their employees? Where do they source their resources from? How much direct involvement to have with supplier? How centralised purchasing should be- do all offices around the world have to use the same company supplier list?

Answer 40

1) For a business to meet the needs and wants of customers, it needs an effective “supply chain” 2) Suppliers determine many of the costs of a business (e.g. raw materials, distribution) 3) Suppliers are closely linked to the overall product quality 4) Suppliers can be an important source of finance to a business (trade credit) 5) For businesses that use lean production techniques, effective relationships with key suppliers are essential

Answer 41

Price- Often considered the most important; value for money is crucial. But lowest price not necessarily the best value- depends on quality Quality- Consistently high quality; the right product at the right time Reliability- Delivers the correct product on time, goods and services work as described Communication- Easy to communicate with supplier - e.g. place orders, develop trading relationship Financially secure- Long-term trading relationship requires supplier to stay in business! Also more likely to offer better payment terms Capacity- Ability to handle increased volume of supply, perhaps at short notice

Answer 42

Lower purchase costs- better prices from a supplier lower the costs of a business Better quality- crucial for a business to satisfy customers Improved customer service- e.g. fewer late deliveries Increased productivity- e.g. fewer production delays, less wastage (lean production) More flexible capacity- e.g. ability of a business to work with suppliers to meet sudden increases in demand

Answer 43

Managing suppliers is linked to managing cash flow Trade credit= where a business buys goods and services from a supplier and pays for them later e.g. 60 days Extending trade creditor terms is a way of improving cash flow( as if delays cash outflows) However, extending trade credit too far risks damaging supplier relationships

Answer 44

The amount of inventory held as a contingency in case of unexpected orders so that such orders can be met and in case of any delays from suppliers

Business Sears- Operations Flashcards

(68 cards)