Operations Management

Question 1

What is labour productivity?

Answer 1

The ratio of a volume measure of output to a volume measure of input

Question 2

Why is quality of human capital a determinant of productivity?

Answer 2

Human resources are the key to productivity enhancement. They need to develop the right attitude, they must also have the right skills and knowledge base. They need to have the main basic skills for productivity improvement.

Question 3

Why is innovation a determinant of productivity?

Answer 3

For the competitiveness to increase it is important to stay innovative, so they have to keep thinking of new ways to do things. Innovation depend upon investment into high quality further and higher education, as the foundation of new products and technologies.

Question 4

Why is investment in physical capital a determinant of productivity?

Answer 4

Is is the most obvious and universally accepted factor influencing productivity is accumulation of capital as they can’t increase productivity with out things like machines and buildings etc.

Question 5

What is adding value?

Answer 5

This is the process of production by which a product becomes of higher value to the purchaser.

Question 6

What is chain of production?

Answer 6

These are the different stages of production that the product goes through until it gets to the buyer. E.g. A loaf of bread will have stages that include planting the wheat, harvesting, milling, mixing, baking, packaging etc. this provides a clear way to add value and show when and why value is added but they still try to add more value wherever possible. But if they want to add more value they need a unique selling point.

Question 7

What is a unique selling point?

Answer 7

This product or service has a feature or features that can be used to separate it from the competition.

Question 8

What is a design feature?

Answer 8

USP can also result from design features of the product I.e. The way the product wS designed. Example of this are the hole in the polo mint, the shape of coca Cola bottles.

Question 9

What is capacity utilisation?

Answer 9

How capacity is used.

Question 10

What are the problem with spare capacity?

Answer 10

Demotivation of staff
Increased costs to the firm
Reduced profits
Lack of return on investment capital

Question 11

Resolving the problems of capacity under-utilisation

Answer 11

Sub-contracting of production
Rationalisation
Increasing the use of assets

Question 12

What does full capacity mean?

Answer 12

That all employed factors of production are being used to their optimum level of efficiency.

Question 13

What is the re-order level?

Answer 13

This is the level of stock at which a new order is placed

Question 14

What is order quantity?

Answer 14

This is the typical quantity ordered

Question 15

What is delivery time?

Answer 15

This is the amount of time taken for order to be delievered.

Question 16

What is buffer stock?

Answer 16

This is the stock level that will always be held in case of problems with delivery (spare stock)

Question 17

What are some advantages of effective stock management?

Answer 17

Reduction in working capital
Improved relationships with customers
Freeing of storage space
Less stock wastage and discounting
Easier stock rotation

Question 18

What is lean production?

Answer 18

These methods teach us that waste is any process that does not give ‘value added’ to a product. So raw materials lying around unused can be seen as waste ‘work in progress’ things lying around can be seen as waste.

Question 19

What are the most important component parts of an effective lean production system are:

Answer 19

Just in time
Kaizen
Cell production
Time based management methods

Question 20

What is just in time?

Answer 20

Only ordering things when they’re needed so nothing is wasted and it getting delivered just in time for delivery

Question 21

Why do they need supplier relationships and stock holding?

Answer 21

They have to have a strong relationship with suppliers otherwise just in time won’t work as they will have other priorities.

Question 22

What is Kanban?

Answer 22

This involves the use of order cards to ensure a regular and timely supply of components. It is not unusual when using a Kanban system to find an employee of the supplier continually working on the shop floor ensuring that the parts arrived in the right place at the right time.

Question 23

Why do they need a strong relationship with employees for lean production to work?

Answer 23

Strong relationship with employees for it to work and they must be trained effectively to use the system of lean production.

Question 24

What is cell production?

Answer 24

This involves workers working in teams or cells. In this type of productive or service situation, each cell has one or more complete tasks to fulfil.

Question 25

Customer relationships

Answer 25

Often customers are able to use electronic point of sales systems and these can be tied with the manufacturing process. This means the finished product can go straight from production line to delivery rather than being stored in a warehouse.

Question 26

What is time based management?

Answer 26

Emphasis on reducing time taken in all aspects of the whole production process. This includes the use of CAD(computer aided design) and CAM( computer aided manufacture) critical path analysis and simultaneous engineering

Question 27

What is simultaneous engineering?

Answer 27

Emphasis is placed on carrying the most tasks possible as near as possible at the same time, the functions include designing, producing and marketing the product

Question 28

What is kaizen?

Answer 28

Continuous improvement in the production process.

Question 29

Using and applying kaizen

Answer 29

Kaizen builds into the production process the idea of continuous improvement. This means an ongoing and continual increase in productivity, increase in quality and reduction in waste.

Question 30

What are kaizen groups?

Answer 30

These are groups of workers who have a common stake in part of the production process e.g. A kaizen group may involve the designer, installation workers and production managers. These groups will meet regularly to discuss problems and suggest improvements.

Question 31

What are the requirement for kaizen to work?

Answer 31

A motivated workforce A management with belief in the capabilities of the workforce Effective communication systems Security of jobs Understanding of the production processes

Question 32

Benefits of kaizen

Answer 32

``` Increased productivity Increased quality Decrease in waste Improved motivation of workforce Reduction in need for large scale capital investment Increase competitiveness Reduced disruption and labour unrest ```

Question 33

What is quality?

Answer 33

A product or service that offers good value for money, convenience or practicality

Question 34

What is internal quality?

Answer 34

Measured against set targets or standards

Question 35

What is external quality?

Answer 35

Measured against the performance of competition or competitors products

Question 36

Achieving quality

Answer 36

``` Purchasing Operations Finance Personnel Marketing ```

Question 37

How can productivity be measured?

Answer 37

Productivity can be measured as the level of output achieved against a fixed input. So we see measures of productivity such as output per man hour, or output per employee re year (used by automobile manufactures)