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Flashcards in Operations Deck (22):

What are the 4 key roles of the operations department?

Purchasing, systems, stock control, quality


What are the 3 stages of goods

Raw materials, Work-in-progress, Finished Goods


Factors to consider when manufacturing and storing goods (5)

The quantity of product required
The volume of products that can be manufactured at once
Working practices, procedures and health and safety requirements
Storage avaliable
Procedures for maintaining and managing quality


5 main purposes of a stock control system

Ensure stock is readily available
Ensure production continues
Avoid delays to orders
Ensure over / under stocking doe not take place
Avoid stock deteriorating


What are 5 consequences of overstocking?

-Stock could go out of date
-stock could go out of fashion
-Increased costs of storage, security, insurance
-Higher risk of theft
-Opportunity cost of money being tied up in stock


What are the 5 consequences of under-stocking?

-May run out of stock / unable to continue production
-Business will not benefit from economies of scale
-Increase in delivery costs
-Complaints if orders are late / bad reputation
-Increased admin costs (complete order forms, deal with complaints)


Features of Inventory Control Chart

Maximum Stock Level
Minimum Stock Level
Re-order level
Re-order Quantity
Lead Time


Advantages of a computerised stock control system

Databases keep balances of inventory which are automatically updated
Can be linked to tills through EPOS
Accurate and constant monitoring of stock levels
Allows for decisions on slow moving stock or best sellers
Can highlight regional variations in stock


Disadvantages of computerised stock control system

Cost a lot of money to install and maintain
Money and time need to be invested
May break down


Advantages of JIT

Less cash is tied up in stock, improving cash flow and working capital
Less wastage as all stock is used for production
Less storage and warehouse space is required
Changes in external impact will have reduced impact


Disadvantages of JIT

Suppliers who are reliable are required
Production can stock if stock is not delivered
Less environmentally friendly
Delivery costs higher
No benefit from economies of scale
No room for error


Advantages of centralised storage

Specialist staff are employed to maintain inventory
Benefit from economies of scale
Improved consistency due to same procedures
May be cheaper
Usually located close to infrastructure


Disadvantages of centralised storage

Inventory needs to be delivered to each division, causing delays
Specialist staff need to be employed
Specialist equipment is required
Inventory usage levels and needs are unclear
Not as efficient as JIT, direct from supplier


Advantages of de-centralised storage

Inventory is always close at hand
More responsive to local needs
Inventory usage reflects production
No negative consequences of overstocking


Disadvantages of de-centralised storage

Can lead to wastage or theft of stock
-Lack of specialist staff makes it clumsy or inefficient
-Each division may handle inventory differently
-Negative consequences of understocking


Factors to consider when distributing goods

-Reliability of other organisations
-Legal Restrictions
-Availability of finance
-The product being distributed
-Image associated
-Stock control system used
-Distribution capability of the manufacturer


4 Methods of distribution

Road Network
Rail Network


Advantages and Disadvantages of road network

-Quick to deliver to cities
-Cheaper than other methods



Advantages and Disadvantages of rail network

-Quick service from city to city
-Good for large products and large quantities

-Some areas don't have a reliable rail service


Advantages and Disadvantages of aeroplanes

-Quick to distribute over a long distance
-Ideal for remote locations

-More expensive
-Airport is not final destination, other transport required


Advantages and Disadvantages of the sea

-Can be useful to transport large quantities over large quantities

-Some areas are not close to docks


6 factors to consider when deciding method of production

-the product being made
-Quantity of product that needs to be made
-the way the business ensures high quality
-The way stock is managed
-Resources available
-Method of distribution
-Technology available