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Decision Making to Improve Operational Decision Making Flashcards

1
Q

Factors of Production

A

Land

Labour

Capital

Enterprise

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2
Q

How does Quality achieve Customer Satisfaction?

A

-Brand image
-Reputation
-Appearance
-Reliability
-Functions
-Cost of ownership e.g. repairs
-Exclusiveness

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3
Q

Quality Control

A

Inspectors check every stage.

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4
Q

Cost of Holding Inventories

A

-Cost of storage
-Interest Costs
-Obsolescence risk
-Stock out costs

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5
Q

Kaizen

A

‘Continuous improvement’

Policy of implementing small incremental changes

Creates a quality culture

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6
Q

TQM

A

Total Quality Management

‘Getting it right first time’

Teams responsible for their quality

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7
Q

Key Reasons to Hold Inventory

A

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

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8
Q

Advantages of Customer Satisfaction

A

-Impact sales
-Create USP
-Charge higher prices
-Cost reductions

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9
Q

Achieving High Labour Productivity

A

Getting the workforce to be more productive is not an easy task and influenced by:
-Quality (and extent) of machinery
-Skills, motivation and ability of workforce
-Methods of production used
-Reliability of raw materials and suppliers

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10
Q

Influences on Amount of Inventory Held

A

-Need to satisfy demand (failure is costly, could be seasonal)
-Need to manage working capital (holding ties up cash and opportunity cost)
-Risk of losing value/inventory (longer stocks are held, greater risk they cannot be used or sold)

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11
Q

Factors of Affecting when/how much Inventory to Re-order

A

-Lead-time from supplier (higher lead time may require higher re-order level)
-Implications of running out (stock-outs) (if damaging then high re-order level)
-Demand for the product (higher demand, higher re-order levels)

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12
Q

Formula for Unit Cost

A

Total costs/output

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13
Q

Ways of Reducing Capacity

A

-Selling off fixed costs
-Changing to shorter working weeks/days
-Laying off workers
-Transferring resources to another area

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14
Q

Considerations of Choosing Suppliers

A

-Good prices
-Payment terms
-Quality
-Capacity of supplier
-Reliability
-Flexibility

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15
Q

Invention and Innovation

A

Invention: formulation of new ideas for products or processes

Innovation: practical application of new inventions into marketable products or services

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16
Q

Types of Innovation

A

Product involution: launching new or improved products (or services) on to the market.

Process Innovation: finding better or more efficient ways of producing existing products, or delivering existing services.

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17
Q

Benefits of Product Innovation

A

-‘First mover advantage’
-Higher profits and profitability
-Added value
-Opportunity to build early customer loyalty
-Enhanced reputation as an innovative company
-Public relations e.g. news coverage
-Increased market share

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18
Q

Methods of Lean Production

A

Time Based Management

Simultaneous Engineering

Just In Time Production

Cell Production

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19
Q

Quality

A

A product or service is of good quality if it meets the needs of expectations of the customer.

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20
Q

Advantages of Low Inventory Levels

A

-Lower inventory holding costs e.g. storage
-Lower risk of obsolescence inventory
-Capital can be used elsewhere in the business
-Consistent with operating ‘lean’

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21
Q

Benefits of Mass Customisation

A

-Higher customer retention (as few options and tailored)
-Fewer unfinished goods need to be stored, reducing costs
-Quick, efficient production process
-Higher price point for customised products, higher profits
-More flexible software and systems to handle highly customised orders

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22
Q

Drawbacks of Mass Customisation

A

-Impossible to build up stock ahead of time
-Forecasting trends in sales more difficult - wide range of options
-Difficult to plan for surge in product demand
-Affects flow of supply chains
-Wait time from order to shipment to in-hand increases
-Increased costs to maintain a variety of machinery that can produce different colours, shapes, etc

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23
Q

Advantages of High Inventory Levels

A

-Production fully supplied (no delays)
-Potential for lower unit costs by ordering in bulk/high quantities
-Better able to handle unexpected changes in demand

24
Q

Ways of Increasing Capacity

A

-Extending factories
-Overtime or longer hours
-Hiring new staff
-Flexible workforce
-Sub-contracting/outsourcing

25
External Operational Objectives
-Competitor efficiency flexibility -Technological change -Economic environment -Legal and environmental change
26
Advantages and Disadvantages of Produce to Order
Advantages: -Customer satisfaction -Customer loyalty -Higher prices Disadvantages -Fluctuations of demand -Higher cost
27
Disadvantages of Customer Satisfaction
-Costs increased -Training needed -Disrupting production
28
Disadvantages of Improving Efficiency
-Capital needed -Train workforce -Higher wages
29
Operational Objectives
-Costs -Quality -Measuring quality -Speed of response -Flexibility -Dependability -Environmental -Added value
30
Internal Operational Objectives
-Corporate objectives -Marketing issues -Finance -Human Resources
31
Benefits of Process Innovation
-Reduced costs -Improved quality -More responsive customer service -Greater flexibility -Higher profits
32
Disadvantages of Labour Productivity
-To increase may have to spend money on training -Increased investment in machinery as well as people i.e. to work more efficiently may need better equipment
33
Causes of Spare Capacity
-New competitors or new products entering the market mean a fall in demand for existing products -Fall in demand as change in fashion/taste -Unsuccessful marketing -Seasonal demand -Over-investment in fixed assets -A merger or takeover leading to duplication of resources
34
Just In Time Advantages and Disadvantages
Advantages: -Increases motivation -Reduces costs Disadvantages: -Bulk-buying discounts -Halt to production line expensive
35
Advantages of Improving Efficiency
-Reduces costs -Reduces waste -Improves quality -Financial monitoring
36
Effective Lean Production Requires..
-Good relations with suppliers -Committed, skilled and motivated employees -Culture of quality assurance; continuous improvement and willingness to embrace change -Trust between management and employees
37
Increasing Capacity
A major decision and would have to fit in with corporate objectives. Businesses need to ensure there's a future demand for the products as well as available finance.
38
Examples of Waste
-Over-production: leads to excess inventories which may be unsalable -Waiting time (idle) -Transport (moving unnecessarily) -Stocks, acceptable buffer, not excessive -Motion: worker appears busy but not adding value -Defects: doesn't meet required quality
39
Formula for Labour Productivity
Output per period/number of employees per period
40
What is Capacity?
The maximum level of output.
41
Advantages of Labour Productivity
-Efficient use of inputs = fewer employees needed -Increasing appeal to stakeholders gives: -> Shareholders a higher ROCE (return on capital employed) -> Employees higher wages
42
Labour Intensive
Method of production that uses high levels of people; labour is expensive in the UK. When labour costs outweigh capital costs of a business.
43
Capital Intensive
Method of production that is highly automated, therefore needs large amounts of investment.
44
Advantages and Disadvantages of Quality Control
Advantages: -Stops faulty goods reaching consumer Disadvantages -No team responsibility
45
Lean Production
An approach to management that focuses on cutting out waste, whilst ensuring quality. This approach can be applied to all aspects of a business. -From design, through production to distribution
46
Problems caused by Poor Quality
-Productivity problems -Reduces profitability -Reduces customer satisfaction -Increases costs
47
If Labour Productivity increases...
Unit cost decreases
48
Formula for Capacity Utilisation
Actual output per annum/maximum possible output x100
49
If Capacity Utilisation increases...
Unit cost will decrease.
50
Outsourcing
The business practice of hiring a party outside a company to perform services or create goods.
51
What is Mass Customisation?
The personalisation or custom-tailoring of goods or services to meet customer needs - but at near mass-production prices. -Collaborative Customisation -Adaptive Customisation -Transport Customisation -Cosmetic Customisation
52
How can Technology Improve Efficiency?
Manufacturing -Robotics -Automation -Planning -Operating Design -Create new products -CAD, CAM
53
Advantages and Disadvantages of Quality Assurance
Advantages: -Encourages teamwork -Reduces costs Disadvantages: -Change in culture (difficult to achieve) -May take time to bed in
54
Main Types of Inventories
Raw materials and components Work in progress Finished goods
55
Economies of Scale
The benefits of being larger -Improving scale of production brings about efficiency -Can affect unit costs -Needs investment
56
Quality Assurance
Improves quality throughout the business
57
Inventory Control Chart
-Buffer level: minimum level of stock -Re-order level: the level at which business needs to order again -Lead time: how long it takes to deliver -Re-order quantity: amount re-ordered

Business (10 decks)

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