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Flashcards in Operations Management Deck (48):

Lean Production

Working practices that focus on removing waste, whilst maintaining or improving quality.


Time Based Management and Lean Design

Reducing waste by managing resources, ensuring products are fit for the market in the shortest time. Aims to reduce wastage and time wasted on unproductiveness, to increase efficiency.


Simultaneous Engineering

Aims to minimise development times, where separate design and engineering stages are tackled at the same time.



Ordering materials just before they are needed. Lower storage / wastage costs. Suppliers are nearby and are flexibility / reliability. Late delivery could be costly.


How JIT is achieved

Based on pulled demand, aiming to operate with zero or minimal buffer stock. Needs to be 0 defects at every stage of production. Removal of hidden inefficiencies.


Critical Path Analysis

A technique used to identify which tasks can be done simultaneously and the order to when they need to be completed.


Nodes Thirds

Big One - Node Number
Top Right - Earliest Start Time
Bottom Right - Latest Finish Time


CPA Problems

CPA doesn't ensure effective management
Project requires many activities, CPA may be confusing
Resources available



Continuous improvement - employees make suggestions for small-scale improvements. Provides motivation for employees given power / opportunity to increase efficiency


Kaizen Advantages

- Efficiency of production
- Removal of waste resources
- Reduction in cost


Total Quality Management

This is when the idea of quality is instilled throughout the business, where quality is checked after each stage.


Operation Management Definition

The attempt to ensure that the right goods/services are produced at the right time at the right cost at the right quality.


Operational Targets

Predetermined targets which relates to a number of efficiency measures e.g unit costs, quality, capacity utilisation.


Under Utilisation

May increase costs, fixed costs spread over less output increasing unit costs.
Higher capacity creates economies of scale decreasing variable costs.


Capacity Utilisation

Current output as a percentage of potential output.


Benefits of Quality

-Less wastage rate.
-Motivation increase productivity Recognition.


Improve Cashflow

Short term/long term finance i.e factoring, loans, sale and leaseback.
Lengthen the credit time to pay back suppliers.


Factors Affecting Suppliers

Price, Payment Terms, Quality, Capacity, Reliability, Flexibility


Quality Definition

This is when the good/service meet customer expectations.


Quality Assurance Measures

Each Stage of the production process, the product is checked to meet the quality requirements.


Advantages of CPA

Individually assessing tasks CPA ↓ time
Resources can be ordered/hired on their EST, ↓ costs
CPA can show the implications of the delayed task


Economies of Scale

Factors that cause unit costs to fall as the amount of output a business produces increases.


Purchasing Power

Large businesses have the power to negotiate large discounts on bulk-orders with their suppliers, therefore reducing their variable costs


Technological EofS

Large businesses are able to afford the capital needed to invest in new, up-to-date equipment / tech. Machinery can decrease unit costs
 and increase productivity.


Specialisation EofS

opportunity to hire specialists like IT consultants / accountants. Able to advise the business on how to reduce costs


Diseconomies of Scale Definition

Factors that cause the unit costs to rise.


Poor Comms DofS

Communication (may) harder when a business grows. Quality / motivation may suffer / mistakes - costly. Written comms (may) less motivating than face-2-face. Large firm time to communicate face-to-face so emails / letters.


Management DofS

Small businesses managing easy. When businesses start to grow and more people become involved, it can be hard to monitor aspects like productivity. Regular meetings may be required which will add to costs


How to change DofS

Delegate power and enrich jobs to increase motivation, hold regular training to improve management, and decentralise a business structure and empower staff in order to improve coordination.


Quantitative Decision making

Payback - How quickly the investments will be recovered
ARR - Average annual profit generated by the project


Qualitative Factors

Locate near where staff live
Economies of scale
Access to customers/suppliers and infrastructure


Multi-Site Advantages

Closer to customers + geographical market
Easier recruitment
Marketing/Managerial EofS
Flex capacity by adding/removing locations
Understanding of local market cultures


Multi Site Disadvantages

Duplication of activities
Harder to control operations
Challenging to communicate
Strategic risk not understanding local market


Problems with international location

Language/Cultural differences - Costs, working hours, public holidays
Economics/Political/Legal stability
Impact on public image using cheap labour


Stock Wastage

Stock wastage – loss of stock either in production or service process, e.g. scraps thrown away, reworking of items that were not done correctly initially or defective products that cannot be put right, damaged products due to improper handling or storage, stealing, passing the sell-by-date.


Stock Rotation

FIFO (First In First Out) or LIFO (Last In First Out). FIFO avoids the problems of leaving older stock to become unusable at the back of the shelf or warehouse.


Needs of Kaizen

CORE principle – Commitment (underlying drive), Ownership (opinions and have a say of the performance), Responsibility of having an opinion and personal Excellence.
Marginal gains – little improvements work together to collectively find new ideas.


Cell Production

Organising production around teams, each team given responsibility to a stage improving quality


Stakeholders Affected - Lean Production

Employee - J-I-T, Kaizen
Suppliers - J-I-T, CPA
Shareholder - Long vs Short term
Competitors - Loss in market share, pricing, less qualified labour stay with Kaizen


Internal Influences on Ops Obj

Corporate Objective
Finance - investment/cost
HR - quality/capacity of workforce
Marketing - Product determines operational set-up changes to marketing mix may strain operations


External Influences on Ops Obj

Economic Environment - PED changes in D/S
Competitors - Efficiency
Technological - Innovation important
Legal/Environmental - Regulation


Operational Strategies

Growth - Organic/Takeovers acquiring others operations
Economies of Scale - Purchasing, Technical, Managerial


Minimum Efficient Scale

Output for a business in the long run where internal economies of scale have been fully exploited, lowering unit costs


Diseconomies of Scale

Problems experiences as a firm increases the scale of production leading to a rise in unit costs
-High Capacity breakdowns
-Controlling productivity levels
-Communication - Alienation losing morale.


DofS Solutions

Delegation, job enrichment, autonomous teams.
Training for communication and listen to worker’s views.
Decentralise power, empower with wider spans of control.


Capital Intensive

Minimise costs, small labour costs
Large part is fixed costs buying capital
High financial barriers to entry
Inflexible hard to switch products


Labour Intensive

High Labour costs
Flexible to meet needs


Operational Innovation

Improve Productivity Lower unit costs
Better Quality meet needs
Product range risk bearing EofS
USP creation adding value
Competition innovated products hard to protect
Availability of finance