Operations

Question 1

Production

Answer 1

The process of converting inputs such as land, labour and capital into sale-able goods

Question 2

Productivity

Answer 2

A measure of the efficiency of inputs used in the production process

Question 3

Calculating productivity

Answer 3

Total output/ Number of production workers

Question 4

Improving labour productivity

Answer 4

• Increasing output with same number of workers

- Keeping output at the same level but with fewer workers

Question 5

Inventories

Answer 5

The stock of raw materials, work-in progress and finished goods held by a business

Question 6

Lean production

Answer 6

The production of goods and services with the minimum waste of resources

Question 7

Advantages of Lean production

Answer 7

• New products can be brought to the market quicker
• Quality is improved
• Wastage of time and resources is reduced or eliminated
• Unit costs are reduced

Question 8

JIT inventory control

Answer 8

No inventories are held by the business. Raw materials arrive from suppliers just as they are needed for the production process.

Question 9

Eval of JIT

Answer 9

:) Reduces costs
:( Businesses need to communicate very well with suppliers
:( Workers and the machinery used in production must be flexible

Question 10

Job production

Answer 10

The production of items one at a time

Question 11

Batch production

Answer 11

The production of goods in batches. Each batch passes through one stage of production before moving on to the next

Question 12

Flow production

Answer 12

The production of very large quantities of identical goods using a continuously moving process

Question 13

Eval of job production

Answer 13

:) Unique, high quality products are produced

:( Uses skilled labour rather than machinery so selling prices are higher

Question 14

Eval of batch production

Answer 14

:) Larger numbers are made so unit costs are lower

:( Workers are less motivated because the work becomes repetitive

Question 15

Eval of flow production

Answer 15

:) More capital intensive than job or batch production so lower labour costs

:( Requires large capital investment in production line technology

Question 16

Eval of new tech for businesses

Answer 16

:) Reduces costs and time taken to design new products

:( Can be expensive to invest in and it is constantly changing

Question 17

Eval of new tech for customers

Answer 17

:) Better quality products

:( Products may become out-of-date more quickly

Question 18

Eval of new tech for workers

Answer 18

:) Tech completes simple and repetitive tasks that workers find boring

:( Can result in redundancy as less importance on workers

Question 19

Costs

Answer 19

• Fixed costs
• Variable costs
• Total costs
• Average costs

Question 20

Fixed costs

Answer 20

Costs that do not change with output

Question 21

Variable costs

Answer 21

Costs that change in direct proportion to output

Question 22

Total costs

Answer 22

All the variable and fixed costs of producing the total output

Question 23

Average costs

Answer 23

The cost of producing a single unit of output

Question 24

Economies of scale

Answer 24

The reduction in average costs as a result of increasing the scale of operations

Question 25

Economies of scale: finance

Answer 25

Banks prefer to lend to larger businesses because they consider them less of a risk than smaller businesses. As a result large businesses find it easier to borrow money and often can at a lower rate of interest.

Question 26

Economies of scale: management

Answer 26

As a business grows it often employs specialist managers for different areas of the business. They improve the quality of business decisions and make fewer mistakes.

Question 27

Economies of scale: marketing

Answer 27

Price of marketing falls as output and sales increase

Question 28

Economies of scale: purchasing

Answer 28

Large businesses usually buy greater quantities of things than small businesses. Suppliers often offer discounts on bulk purchases.

Question 29

Economies of scale: technology

Answer 29

Large businesses usually use flow production to produce their output. This method of production often uses the latest tech. This tech enables them to produce higher levels of output at lower unit costs.

Question 30

Diseconomies of scale

Answer 30

Factors that cause average costs to rise as the scale of operations increases

Question 31

Poor communication

Answer 31

If a business becomes too large, managers may no longer be able to communicate directly with workers. This leads to slow and poor decision making

Question 32

Demotivation of workers

Answer 32

In large businesses managers may no longer have day to day contact with workers. This can lead to demotivation. This leads to poor quality and a fall in productivity.

Question 33

Poor control

Answer 33

The control of the business can be slow. There might be a waste of resources so costs are increased unnecessarily.

Question 34

Quality standards

Answer 34

The minimum acceptable standard of production or service to consumers

Question 35

Quality control

Answer 35

Checking the quality of goods through inspection

Question 36

Quality assurance

Answer 36

A system of setting standards for each stage of production

Question 37

Eval of Quality Control

Answer 37

:( The work can be repetitive
:( Problems that occur at the beginning are not found soon enough
:( Workers do not see quality as a responsibility

Question 38

Eval of Quality Assurance

Answer 38

:) It encourages teamwork and this is motivating
:) It reduces the cost of wastage and faulty products
:) Quality issues are found when they occur and not at the end of the production process