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Flashcards in Operations Deck (13):

When choosing a supplier what factors would you consider? (4 marks)

Cost of raw materials: Costs need to be kept as low as possible to make a profit. Low costs will improve the cash flow of a business.

Quality of raw materials: Without high quality raw materials, the finished product will not be of a high quality. Low quality raw materials will probably result in higher wastage.

Lead time: Some raw materials need to be used quickly or they may go out of date. Without raw materials being delivered on time, production might have to stop, which is costly.

Location of supplier: The further away the supplier is, the longer the raw materials will take to be delivered. Te cost of transporting products has to be considered.


What is maximum stock level?

This s determined by how popular the stock is and what storage space is available.


What is minimum stock level?

This is determined by how popular the stock is and how long it takes for an emergency order to be received.


What is re-order stock level?

This is determined by how long it takes an order to be received. Stock must be received before old stock runs out.


What is re-order quantity?

Will be set based on what the re-order stock level is . The re-order quantity should not take stock levels above the maximum stock level.


What is lead time?

This refers to the length of time it takes a supplier to deliver stock once it has been ordered.


Give 2 reasons why overstocking is a problem.

High storage costs and stock may go out of fashion/date therefore would ave to be thrown away.


Give 2 reasons why understocking is a problem.

The business may run out of stock to sell and if a customer cant get the stock they want, they may go elsewhere.


State the 3 main methods of production.

Job Production, Batch Production and Flow Production(also known as Line, Mass or Continuous Flow Production).


Give 2 benefits of using Labour Intensive Production

-Some products can be produced to a better standard by employees.
- Machines can be too expensive to purchase.


Give 2 drawbacks of using Labour Intensive Production.

- Employees tend to work more slowly then machines.
- Employees can make more errors when making a product.


Give 2 benefits of using Capital Intensive Production(Mechanisation or Automation).

- Machines work faster then employees.
- Machines make less mistakes and errors then employees.


Give 2 drawbacks of using Capital Intensive Production(Mechanisation or Automation).

- Machinery is expensive to purchase, replace and repair.
- If a machine breaks down production may have to stop until it is repaired.