Making operational decisions

Question 1

production

Answer 1

transformation of resources into finished goods or services

Question 2

goods

Answer 2

physical products

Question 3

services

Answer 3

non-physical items

Question 4

methods of production

Answer 4

job production
batch production
flow production

Question 5

what factors do the method of production used by a business depend on?

Answer 5

level of output
nature of product
wether product is standardised or customised
level of automations used in production

Question 6

job production

Answer 6

manufacturers produce one product at a time as ordered by the customer

Question 7

job production advantages

Answer 7

high quality product
motivated and highly skilled workers
customised products can be produced

Question 8

job production disadvantages

Answer 8

production is slow
labour costs are high

Question 9

flow production

Answer 9

continuous manufacturing of standardised products, usually on a production line

Question 10

flow production advantages

Answer 10

low unit cost due to economies of scale
rapid production usually highly automated

Question 11

flow production disadvantages

Answer 11

customisation is difficult
capital equipment can be expensive to purchase

Question 12

batch production

Answer 12

groups of the same product are produced as a batch

Question 13

batch production advantages

Answer 13

workers can specialise
production can take place as the previous batch starts running out

Question 14

batch production disadvantages

Answer 14

requires careful coordination to avoid shortages
money is tied up in stock
completed products need to be stored

Question 15

flexibility in production

Answer 15

how easy it is to install machinery and switch to different machinery which is required to manufacture different products

Question 16

3D printers

Answer 16

digital design is uploaded and the printer produces the product with minimal labour costs

Question 17

impact of new technology on cost

Answer 17

with 3D printing, cost of manufacturing is reduced as there is no need for expensive tooling

Question 18

impact of new technology on productivity

Answer 18

with 3D printing, products can be produced quickly and easily, with minimal lead times
allows business to bring new products to market faster and respond more quickly to changing customer preferences

Question 19

impact of new technology on quality

Answer 19

3D printer allows for precise and accurate production of complex shapes and designs, resulting in higher quality products

Question 20

impact of new technology on flexibility

Answer 20

3D printing products can easily be customised to meet the specific needs of customers

3D printing allows for small production runs which reduces the costs of specific job production

Question 21

maximum stock level

Answer 21

maximum amount of stock a business is able to hold in normal circumstances

Question 22

reorder level

Answer 22

level at which a business places a new order with its suppliers

Question 23

minimum stock level/buffer stock

Answer 23

lowest level at which a business is willing to allow stock levels to fall

Question 24

lead time

Answer 24

length of time from the point of stock being ordered from the supplier to it being delivered

Question 25

factors that can influence the efficiency of raw material procurement

Answer 25

quality of raw materials cost of raw materials delivery ( costs, speed, reliability ) relationship with suppliers availability of raw materials

Question 26

factors that influence the process of sourcing raw materials - quality

Answer 26

if raw materials are of poor quality, then final product may not meet the desired standards

Question 27

factors that influence the process of sourcing raw materials - delivery

Answer 27

companies need to ensure that their raw materials are delivered on time, at a reasonable cost, and in a reliable manner many companies are now using an order and delivery process called just in time

Question 28

factors that influence the process of sourcing raw materials - availability

Answer 28

companies need to ensure that raw materials they need are readily available

Question 29

factors that influence the process of sourcing raw materials - costs

Answer 29

companies need to ensure that they are getting the best possible price for their raw materials without sacrificing quality

Question 30

factors that influence the process of sourcing raw materials - trust

Answer 30

companies need to ensure that they are working with reliable suppliers who can deliver quality materials on time and at a reasonable cost

Question 31

Just in Time (JIT) stock management

Answer 31

process in which raw materials are not stored onsite but ordered as required and delivered by suppliers ‘just in time’ to be used

Question 32

advantages of JIT stock management

Answer 32

stockholding costs are minimised working relationships developed w small number of trusted suppliers cash flow is improved as money is not tied up in stocks unused storage space is available for productive use teamwork is encouraged so employee motivation is likely to be improved

Question 33

disadvantages of JIT stock management

Answer 33

ability to respond to unexpected increases in demand is reduced administrative costs related to frequent ordering are increased unreliable suppliers can quickly halt production

Question 34

quality control

Answer 34

inspecting the quality of output at the end of the production process

Question 35

quality control benefits

Answer 35

quality specialists are employed to check standards inexpensive, simple way to check output is fit for purpose

Question 36

quality control drawbacks

Answer 36

rejection of finished good is significant waste of resources little focus on cause of defects

Question 37

quality assurance benefits

Answer 37

issues are identified early so products can be reworked cause of defects is focus so future quality issues may be prevented controlling quality throughout the production process can be expensive but reduces costs ultimately because defects don’t have to be dealt with

Question 38

quality assurance

Answer 38

inspecting quality throughout the process

Question 39

quality assurance drawbacks

Answer 39

staff training and a skilled workforce required so labour costs may be increased reworking may lengthen the production process

Question 40

competitive advantage from quality management

Answer 40

unit costs are likely to be low if business takes a preventative approach - low costs may allow a business to reduce its selling price to better compete w or undercut its rivals increased finance may be available to fund marketing activity to improve brand recognition and attract new customers high level of quality can be used in promotional activity and provide a USP - ease expansion into new. markets asa result of the positive reputation it creates

Question 41

steps in sales process

Answer 41

gain customer interest provide speedy and efficient service engage the customer provide post-sales service achieve customer loyalty

Question 42

Gain customer interest - explanation

Answer 42

must make customer aware of product through marketing activities may also be gained through product knowledge

Question 43

provide speedy and efficient service - explanation

Answer 43

must be flexible to take orders, produce and deliver to customers promptly

Question 44

product knowledge

Answer 44

salesperson needs to be able to talk confidently about product features and be capable of answering questions and making recommendations.

Question 45

how can speed and efficiency be improved ?

Answer 45

delivering & installing products for customers allowing customers to choose a convenient delivery method making online platforms easy to use reducing queues at checkouts providing a range of way for customers to contact the business

Question 46

engage the customer - explanation

Answer 46

regular communication with customer customised items may also need customer approval before they are manufactured

Question 47

provide post-sales service - explanation

Answer 47

support given to customers after the purchase of a product can include - support in using product - dealing w complaints - providing servicing or repairs some elements can be included within the product package

Question 48

achieve customer loyalty - explanation

Answer 48

important as it leads to repeat sales and valuable word-of-mouth reviews

Question 49

importance of customer service

Answer 49

generates customer loyalty —-> drives repeat purchases —> helps firm reduce marketing costs when launching new products

Question 50

How businesses develop customer loyalty - customer service

Answer 50

when they have a positive experience, more likely to return and recommend business to others

Question 51

How businesses develop customer loyalty - loyalty cards

Answer 51

popular way for businesses to encourage repeat customers offer rewards or discounts for frequent purchases

Question 52

How businesses develop customer loyalty - savers schemes

Answer 52

offer discounts or special pricing for customers who save money with them helps customers gradually save up money that can be used at periods when food bills are usually higher e.g. Christmas