Operations

Question 1

What factors should be considered when choosing a supplier?

Answer 1

1. PRICE - cheap prices leads to lower costs
2. QUALITY - high quality leads to lower returns
3. LOCATION - if located nearby, then lower delivery costs
4. LEAD TIME - consistent lead times help planning
5. RELIABILITY - supplier must deliver good quality, on time, every time
6. Credit Terms - the supplier gives you 60 days to pay them

Question 2

Can you list the factors that influence where a business LOCATES its business?

Answer 2

1. Customers
2. Suppliers
3. Access to raw materials
4. Government assistance
5. High Unemployment
6. Cheap land & vast area
7. Near good infrastructure e.g. motorway

Question 3

What are the 3 types of stock?

Answer 3

Raw Materials

Work in Progress (WIP)

Finished Stock

Question 4

Outline the stages of Inventory Control Diagram

Answer 4

1. MINIMUM STOCK - lowest level of stock firm can get to (incl. buffer)
2. MAXIMUM STOCK - maximum level of stock firm is willing to hold
3. LEAD TIME - time taken from placing a stock order to receiving it
4. RE-ORDER LEVEL - level of stock where order is automatically made
5. RE-ORDER QUANTITY - volume of stock to reach Maximum Stock level

Question 5

Draw the Inventory Control Diagram

Answer 5

Question 6

Can you list the 3 Factors of Production?

Answer 6

JOB Production

BATCH Production

FLOW Production

Question 7

Define: Job Production

Answer 7

The one off production of a product.

Question 8

Define: Batch Production

Answer 8

The making of a group of identical products

Question 9

Define: Flow Production

Answer 9

This is the continual manufacture of identical products.

Question 10

Describe the COSTS of Job Production

Answer 10

1. Labour is expensive
2. Materials cannot be bought in bulk
3. High wastage costs

Question 11

Describe the BENEFITS of Job Production

Answer 11

1. It is unique, so high prices can be charged.
2. Product built to customer specifications
3. Work is more interesting, therefore workers motivated

Question 12

Describe the COSTS of Batch Production

Answer 12

1. Build up of stock between stages.
2. Takes time to switch from one batch to another.
3. Need bigger space than for Job Production

Question 13

Describe BENEFITS of Batch Production

Answer 13

1. Variety of the product is produced —> appeal to different customer segments
2. Bulk buying opportunities are possible

Question 14

Describe the COSTS of Flow Production

Answer 14

1. Products are all the same which means no variety

2. Staff can get bored on production line

Question 15

Describe the BENEFITS of Flow Production

Answer 15

1. Minimum human error
2. High volume which means high sales
3. Huge bulk buying opportunities

Question 16

List the QUALITY METHODS

Answer 16

1. Quality Assurance
2. Quality Control
3. Benchmarking
4. Quality Circles
5. Quality Inputs

Question 17

Define QUALITY ASSURANCE

Answer 17

Checking the quality at each stage of production

Question 18

Define QUALITY CONTROL

Answer 18

When firm checks the quality of the finished product

Question 19

Define BENCHMARKING

Answer 19

The firm will check the quality of their product against the market leader.

Question 20

Define QUALITY CIRCLES

Answer 20

Staff meet up in groups to discuss issues including quality

Question 21

Define QUALITY INPUTS (or Quality Raw Materials)

Answer 21

This is ensuring the best quality raw materials are used to ensure product is best quality

Question 22

Suggests ways of producing in an ETHICAL way

Answer 22

1. Using organic fertilisers
2. Paying the Living Way
3. Avoid hiring child labour
4. Ensuring the firm follows Government Guidelines

Question 23

Describe the costs and benefits of the Ethical Approach: HIGH FARM STANDARDS e.g. organic fertilisers

Answer 23

COST: Expensive

BENEFIT: The firm can charge a higher price

Question 24

Describe the costs and benefits of the Ethical Approach: PAYING THE LIVING WAGE

Answer 24

COSTS: A firm’s costs are higher

BENEFITS: Attracts employees

Question 25

Describe the costs and benefits of the Ethical Approach: AVOID CHILD LABOUR

Answer 25

COSTS: Current jobs are difficult BENEFITS: You avoid bad publicity

Question 26

Describe the costs and benefits of the Ethical Approach: GENERAL

Answer 26

COSTS: Can limit the number of customers BENEFITS: You avoid government fines

Question 27

Suggests ways of producing in an ENVIRONMENTAL way

Answer 27

1. Sales staff use electric cars 2. Use solar panels and renewable energy 3. Use biodegradable wrapping 4. Use organic fertilisers 5. Minimise packaging

Question 28

Describe the costs and benefits of producing in an environmentally manner: WASTE REDUCTION

Answer 28

COSTS: It can be expensive to manage waste reduction e.g. training staff BENEFITS: It will reduce overall costs

Question 29

Describe the costs and benefits of producing in an environmentally manner: RECYCLING

Answer 29

COSTS: Somethings are difficult and expensive to recycle eg. Plastic BENEFITS: Less rubbish reaching landfill sites

Question 30

Describe the costs and benefits of producing in an environmentally manner: MINIMUM PACKAGING

Answer 30

COSTS: Many need more complex processes BENEFITS: Less materials, therefore cheaper