Chapter 33-41 Operations

Question 1

Job production

Answer 1

Single, unique items are made one at a time.

Question 2

Batch production

Answer 2

Limited number of identical products are made in groups

Question 3

Flow or mass production

Answer 3

A continuous process where large volumes of identical products flow from one stage of
production to the next on a production line.

Question 4

Labour productivity

Answer 4

A measurement of the output per worker that shows how efficient workers in a business are at turning production inputs into outputs.

Question 5

Rationalisation

Answer 5

Concentrating on core products and disposing of those products/services/assets/employees that are not seen as profitable.

Question 6

Computer modelling

Answer 6

Computers which are programmed to predict future outcomes by testing a range of ‘whatif’ scenarios in order to improve product safety, performance & efficiency

Question 7

Computer aided design (CAD)

Answer 7

An interactive computer system which is capable of generating, storing and using
computer graphics to assist design engineers to create images of new products.

Question 8

Computer aided manufacturing

Answer 8

Using programmed computers and robots to produce goods

Question 9

Lean production

Answer 9

The reduction and removal of waste from the production process, which will result in
increased productivity and reduced costs

Question 10

JIT

Answer 10

Parts, raw materials and components are received and products are made only when
there is demand for the parts and demand for the products

Question 11

Kaizen

Answer 11

Continuous improvement. Be continually making small incremental steps in the
improvement of quality, design and waste reduction.

Question 12

Cell production

Answer 12

Groups of workers who are multi-skilled and can be self-managing, where each group is
responsible for completing a task, and members are expected to play a role in improving quality and flexibility in the production process

Question 13

Time based management

Answer 13

Process that focus on time as a key business resource, including concepts such as just-intime, Computer Aided Design, Computer Aided Manufacture, Critical Path Analysis and Simultaneous Engineering

Question 14

Quality assurance

Answer 14

Checking quality throughout the production process

Question 15

Quality control

Answer 15

Checking quality at the end of the production line through inspections and sampling.

Question 16

Benchmarking

Answer 16

Setting standards of quality and output which are based on the best that competitors are achieving

Question 17

Total quality management

Answer 17

TQM – A total process of creating quality through continuous improvement in all stages of production

Question 18

Quality chains

Answer 18

Where the next person in the production process is treated as a customer and customer satisfaction is the objective

Question 19

Economies of scale

Answer 19

The reduction in average costs of production that occur as output increases

Question 20

Internal economies of scale

Answer 20

Reductions in the average cost per unit of output as a result of increasing internal
efficiencies within a business.

Question 21

Purchasing economies

Answer 21

As output increases, so can the size of orders for raw materials, which may result in bulk
discounts being given which therefore reduces the average cost of production.

Question 22

Technical economies

Answer 22

As a business grows it can afford to purchase the latest equipment which will result in
increased efficiency and productivity, reducing average costs of production.

Question 23

Financial economies (internal)

Answer 23

As a business grows it will have access to a wider range of finance, and they have more
collateral to offer lenders as security – reducing the risk. As a result they can often
negotiate more favourable rates of interest and thus lower the average cost of borrowing.

Question 24

Managerial economies

Answer 24

As a business grows it can employ specialists who can increase efficiency of production,
marketing or purchasing thereby reducing the average costs of production.

Question 25

Marketing economies

Answer 25

As a business grows each pound spent on advertising will have greater benefit as the cost of the advert can be spread across a larger number of products thereby reducing the average cost of marketing

Question 26

External economies of scale

Answer 26

The advantages of scale that benefit a whole industry and not just an individual business. E.g. Educational & supplier

Question 27

Supplier economies

Answer 27

A network of suppliers may be attracted to an area where a particular industry is growing. If the suppliers are in competition with each other this may reduce buying costs and improve services like Just-in-time

Question 28

Educational economies

Answer 28

Local colleges will set up training schemes suited to the largest employer’s needs providing an available pool of skilled labour, thereby reducing recruitment and training costs for all businesses in the industry

Question 29

Financial economies (external)

Answer 29

financial institutions providing services that may be particularly geared towards a particular industry.

Question 30

Diseconomies of scale

Answer 30

The factors that cause higher costs per unit of output when the scale of a business continues to increase causing inefficiency in large organisations. E.g. Coordination, communication & motivation issues

Question 31

Added value

Answer 31

The difference between the cost of purchasing raw materials and the price for which the finished good is sold.

Question 32

Labour productivity equation

Answer 32

Output (per period) . / Number of employees (per period)

Question 33

Capital productivity definition

Answer 33

A measurement of how productive the capital invested in the business is.

Question 34

Capital productivity equation

Answer 34

Output / . Capital employed

Question 35

Capacity utilisation definition

Answer 35

The percentage of a business’s total capacity that is being used at a given level of output.

Question 36

Capacity utilisation equation

Answer 36

Current level of output / Maximum level of output (Capacity) x100

Question 37

Capacity underutilisation

Answer 37

When the level of spare (unused) capacity is significant enough to be of concern.

Question 38

Subcontracting of production

Answer 38

Getting another business to produce the goods for you.

Question 39

Full capacity

Answer 39

All employed factors of production are being used to their optimum level of efficiency – producing the maximum level of output.

Question 40

Robotics

Answer 40

Machines which can operate with a degree of autonomy in the production process, because they are controlled by cameras and sensors rather than being operated and controlled by human workers.

Question 41

Information technology (IT)

Answer 41

The use of any computers, storage, networking and processes to create, process, store, secure and exchange all forms of electronic data

Question 42

Production control

Answer 42

Ensuring that standards set, and processes designed to meet targets, are actually being used in the workplace.

Question 43

Zero-defects

Answer 43

Attempting to achieve perfect product quality, time after time.

Question 44

Inventory

Answer 44

Stock; whether it is of raw materials, work in progress or finished goods.

Question 45

Bar gate stock graph

Answer 45

A graph showing the changing levels of stock held by a business over a period of time.

Question 46

Maximum stock level

Answer 46

The highest amount of stock that a business has space to store.

Question 47

Reorder level

Answer 47

The highest stock amount of stock that a business has space to store.

Question 48

Minimum stock level

Answer 48

The lowest level of stock that a business wants to keep in case of problems with delivery or a rush of orders so that it does not run out of stock.

Question 49

Reorder quantity

Answer 49

The amount of stock that has been ordered. It is the difference between the maximum and minimum stock holding levels.

Question 50

Lead time

Answer 50

The amount of time taken from when the order is placed until the delivery arrives.

Question 51

Buffer stock

Answer 51

The amount of stock that will always be held in case of problems with delivery.

Question 52

advantages of using technology

Answer 52

* improved quality – thanks to their high precision and the ability to do the same thing in the same way day after day, robots and CAM processes have the ability to consistently produce top-quality products and accurately perform repetitive tasks; * faster innovation – it is much easier, and less expensive, to model and test new products using CAD and computer modelling; * more effective marketing and sales – marketing new products encourages consumers to dump old products and buy new ones on a regular basis; * less dependency on labour – this is important to the business in reducing costs, especially if workers had used their bargaining power to push for higher wages and improved conditions; * increased productivity; * reduced waste and costs; * improved communications.

Question 53

5 most important technologies

Answer 53

- CAD - CAM - IT - computer modelling - robotics

Question 54

3 types of production

Answer 54

- job production - batch production - flow production

Question 55

4 lean production methods

Answer 55

* Just-in-time; * Kaizen; * Cell production; * Time-based management methods.

Question 56

Methods used to generate new ideas include:

Answer 56

* Pure research – research just to find out how or why, with no product objective. This type of research is often carried out by universities or research institutes. * Laboratory research – for example, the testing of new pharmaceutical compounds on animals. * Evaluation of existing products – are there problems with this product? How can such problems be resolved? * Brainstorming using discussion groups – thinking outside of the box, novel ideas for solving existing problems

Question 57

Benefits of R&D

Answer 57

- Reduction in costs and improves the company's image - Launch new products in order to gain a competitive edge - improves the working environment making it safer and cleaner - Benefits consumers with a greater variety of goods and services

Question 58

5 internal economies of scale

Answer 58

- purchasing - technical - managerial - financial - marketing

Question 59

3 external economies of scale

Answer 59

- financial - educational - supplier

Question 60

internal diseconomies of scale

Answer 60

- coordination issues - communication issues - motivational issues

Question 61

external diseconomies of scale

Answer 61

- overcrowding in industrial areas - increased price of resources

Question 62

# Internal diseconomies of scale Coordination issues

Answer 62

The larger an organisation becomes, the more difficult it is to coordinate. Inevitably there is a good deal of delegation and this empowerment of more and more managers to make their own decisions can result in different departments heading in different directions

Question 63

# Internal diseconomies of scale Communication issues

Answer 63

As an organisation grows and levels of hierarchy increase, the efficiency and effectiveness of communication breaks down. This leads to increasing misunderstanding and inefficiency as each level of hierarchy grows further and further apart and messages become distorted, resulting in increasing average costs.

Question 64

# Internal diseconomies of scale Motivation issues

Answer 64

With larger businesses it is harder to satisfy and motivate workers as many may feel that their views are ignored, as they distanced from the organisation’s decision makers. This means that they may not give of their best as they are not focused on the organisation’s aims and objectives

Question 65

# External diseconomies of scale Overcrowding in industrial areas

Answer 65

Traffic congestion may occur – resulting in late deliveries and staff arriving late for work. Local residents may resent this and public relations may suffer.

Question 66

# External diseconomies of scale Increased price of resources

Answer 66

More businesses in an area means increased demand for labour to work in that industry and the best employees may be harder to recruit and keep. Land, services and materials may all become more expensive as the industry grows and demand for such resources increases

Question 67

what are the new technology in marketing

Answer 67

- m-commerce - clicks and bricks - social media - pricing and the internet - e- tailing

Question 68

How can a business increase the added value of a good

Answer 68

- improve product quality - enhance design and packaging - build a strong brand - offer excellent customer service - innovate and differentiate - improve convenience - use ethical and sustainable practices

Question 69

Drawbacks of adapting a lean production method

Answer 69

- high initial cost - staff resistance - Job insecurity - pressure on workers - supply chain dependency - reduced flexibility - continuous monitoring required

Question 70

3 main types of stock a business may hold

Answer 70

- finished product - work in progress - raw materials

Question 71

simultaneous engineering

Answer 71

is a product development approach where different stages of the process are carried out at the same time rather than one after the other