Operations Management

Question 1

Tangibles

Definition

Answer 1

(Definition) Tangibles are goods that can be touched: eg- manufactured goods such as the drink Yakut

Question 2

Intangibles

Definition

Answer 2

(Definition) Intangibles includes services which cannot be touched: eg- services such as those performed at the hotel Mercure including a housekeeping service.

Question 3

Inputs
(Definition)
(Six categories)
(difference)

Answer 3

(Definition) Inputs are resources used in the process of production: eg- sugar and skim milk in making Yakult

Six categories of Inputs

1. Materials
2. Labour
3. Information from a various of sources
4. Time
5. Capital equipment
6. Money

Manufacturers tend to make more use of capital equipment and materials and less labour and information
WHEREAS
Services tend to focus more on labour, information and time and less on capital equipment.

Question 4

Processes/ Transformation
(Definition)
(difference)

Answer 4

(Definition) Transformation/ Processes is the conversion of inputs into outputs: eg- Yakut fermenting their ingredients in order to create the finished product of the drink.

A manufacturer transforms inputs into tangible products.
WHEREAS
A service transforms inputs into intangible products

Question 5

Outputs

Definition

Answer 5

(Definition) Outputs refer to the end result of a businesses efforts- The service or product is delivered or provided to the consumer: eg- The drink of Yakut

Question 6

Office Technology- services strategy

def

Answer 6

Office communication technologies have enabled whole markets to open up as business can reach more customers around the world.

Eg- computers, videoconferencing, EFT/EFTPOS

Question 7

Customer Relationship Management (CRM) - Services strategy

def
(Pro)

Answer 7

(Definition) Customers Relationship Management (CRM) refers to the system that business make use of to maintain customer contact.
Pro
CRM software can be used to improved customer service and increase competitiveness, because it stores information about existing and potential customers.

Question 8

Website Development - service strategy
(Explain)
(Ad)

Answer 8

(Explain) The Operations department may work with technology support to develop ways to make it easier for customers to purchase goods or services online or to share information.
(Ad)
A business may develop its website to increase the amount of information it gets from its customers and analyse this information
It can provide detailed information to suppliers for example it can make procurement activities available to potential suppliers.

Question 9

Procurement

Definition

Answer 9

(Definition) Procurement refers to the process of researching and selecting suppliers, establishing payment terms, negotiating contracts and the actual purchasing of resources that are vital to the operations of the business

Question 10

Automated Production Lines - Manufacturing strategy
(Definition)
(key feature)

Answer 10

(Definition) an Automated Production line is comprised of machinery and equipment arranged in a sequence with components added to the good as it proceeds through each step, with the process controlled by computers:

eg- Yakut used a production line to clean, paint and fill the Yakut bottles.

A key feature of an automated production line is the use of robotics

Question 11

Robotics- Manufacturing strategy
(Definition)
(Ad)
(Dis)

Answer 11

(Definition) Robotics is a highly specialised form of technology capable of complex tasks

AD-

• Robotics allow for a degree of precision and accuracy generally unmatched by human labour.
• economical for the business for they do not require pay increases or sick leave
• dangerous jobs to be done with robotics protecting employees from harm.

DIS-

• causes retrenchment and redundancy
• Employees may fear losing their job to new technology
• can break down stopping production which can be expensive

Question 12

Computer Aided Design= CAD- Manufacturing strategy
(Definition)
(Explain)
(feature)

Answer 12

(Definition) Computer Aided Design (CAD) is a computerised design tool that allows a business to create product possibilities from a series of input parameters

(Explain)
It creates 3D diagrams from a set of given data (Parameters) once the design has been created it can be viewed from a range of angles assisting the designer to visualise what will be produced.

Question 13

Computer Aided Manufacturing = CAM- manufacturing strategy
(Definition)
(Explain)

Answer 13

(Definition) Computer Aided Manufacturing is software that designs and controls manufacturing processes

(Explain) CAM is software used to allow the manufacturing process to become computer directed by designing and controlling the process.

Question 14

Computer Intergraded Manufacturing=CIM-Manufacturing
strategy (Definition)
(Explain)
(eg)

Answer 14

(Definition) Computer Intergrading Manufacturing (CIM) is a method of manufacturing in which the entire production process is controlled by a computer.

(Explain) CIM uses a computerised system to combine CAD and CAM to manage the entire production process.

eg- Product design, analyses, planning, purchasing, costing, inventory control and distribution

Question 15

Materials Management
(Definition)
(Explain)

Answer 15

(Definition) Materials Management is the strategy that manages the use, storage and delivery of materials to ensure the right amount of inputs is available when required in the operations system: eg- forecasting

(Explain) Materials Management is all about managing the way that materials are received and stored, and ensuring that the materials are available in the operations management system

Question 16

Inventory
(Definition)
(Explain)
(AD)
(DIS)

Answer 16

(Definition) is the goods and materials held as stock by the business: eg- the amount of stored skim milk powder Yakut may have for future makings of the drink.

(Explain)
A large inventory may ensure the business that materials will not run out; however this ensures a cost to the business. stock may taking up storage for long periods of time can mean that the business misses the opportunity to invest the money in other places.

AD-
The stock will never run out

DIS
expensive over long periods of time
materials may have a “used by date” meaning they may become unusable after a certain period.

Question 17

Materials Handling
(Definition)
(Ad)

Answer 17

(Definition) Materials Handling is the physical handling of goods in a warehouse and at distribution points.

Ad:

• more efficient production process
• Cost Saving
• reduce chances of accidents, breakage and spoilage.

Question 18

Forecasting
(Definition)
(Explain)
(Features)

Answer 18

(Definition) Forecasting is a materials planning tool that relies on data from the past and present and analysis of trends to attempt to determine future events.

(Explain)

Operations area will use forecasting to develop a production plan and reduce the uncertainty of future events. This will allow the business to decide what goods or services to produce, how to produce them and in what quantity and timing of demand for its goods or services then match supply and demand.

(Features)
can be in short term (an hour, day, week, month, year)
or long term (3-5 years or the lifetime of the product)

2 Categories

Quantitive: makes use of data in numerical form through analysis of numerical facts or historical patterns in statistics from the pervious five years

Qualitative: gathers information that is usually based on the opinions of people through methods such as questionnaires and market research.

Question 19

Materials Planning: Production plan
(Def)
(Explain)

Answer 19

(Def) A production plan is an outline of the activities undertaken to combine resources (inputs) to creates goods or services: eg- master production schedule (MPS)

(Explain) A production plan provides the basic information necessary for detailed materials management planning. modern business typically complete materials planning by using software.

Question 20

Materials Planning: Master production schedule

Def

Answer 20

(Def) a Master Productions schedule is a plan that details what is to be produced and when: eg- delivery dates

(Explain) MPS is a plan that describes what is to be produced in what qualities, how and when. The plan is linked to specific delivery dates or contracts for delivery in the future.

Question 21

Materials Planning: Materials requirement planning

def
(explain)
(it must consider)

Answer 21

(def) Materials Requirement planning involved developing an itemised list of all materials involved in production meet the specific orders
(explain) MPR is completed after the business has a clear understanding of the quantities to be produced and the time frame involved. it is an itemized list of all materials involved in production to meet the specific orders

it must consider:

• Lead times required by suppliers; that is whether items need to be ordered weeks or months in advance.
• the exact number of inputs to complete the tasks
• the amount of stock (inventory) on hand
• purchasing procedures; for example whether the business wished to take advantage of bulk purchasing discounts offered by suppliers

Question 22

Inventory Control
(def)
(Explain)

Answer 22

(def) Inventory Control ensures that costs are minimalist and that the operations system has access to the right amounts of inputs when required. eg: Bar coding and computerised stock records or Just in Time

(Explain) inventory control is a system used to ensure that costs associated with maintaining an inventory of materials are kept to a minimum. Costs can be minimised by not allowing materials to remain idle and by making sure that inputs are available for the operating system when needed. An Operating System that runs out of materials will not be able to perform at an optimum level.

Question 23

Inventory Control: Just in time

Def
(explain)

Answer 23

(Def) Just in time is a materials management strategy that ensures that the exact amount of materials inputs will arrive only as they needed in the operations process

(explain) this approach makes sure that the right amount of materials arrive just as they are needed for production. it can reduce storage costs and reduce the risk of ant waste occurring in storage, thus increasing competitiveness. However, supplier deliveries must be reliable and materials must be received at the appropriate time.

Question 24

Quality
(Def)
(Explain)
(When managing quality a business will)

Answer 24

(Def) Quality refers to the degree of excellence of goods or services and their fitness for a stated purpose: eg- Quality Control and Quality Assurance

(Explain) Quality basically means that the customer gets what they wanted. A quality product has a high degree of excellence and achieves the purpose for which it was designed. a quality product should be reliable, easy to use, durable, well designed and delivered on time

When managing quality a business will:

• minimise waste and defects
• strictly conform to standards
• reduce variance in final product

Question 25

Quality Control (Def) (Explain) (Features)

Answer 25

(Def) Quality Control involves the use of inspections at various points in the production process to check for problems and defects. (Explain) Quality control optimised a businesses production process for it reduces problems and defects in the product, using inspections at various points in the process. (Features) Specifications or benchmarks are set before the physical checks are completed does present as a cost as rejected products will end up as waste, unless they can be reworked and more time is needed to be added to the production process to inspect products.

Question 26

``` Quality Assurance (Def) (Features) (Pro) (Con) ```

Answer 26

(Def) Quality Assurance involves the use of a system so that a business achieves set standards in production (Features) ISO: International Organisation for Standardisation. this provides guidelines on how a business should establish quality assurance systems by adopting specific procedures, controls and recording and documentation measures. meeting these standards is voluntary. (Pro) can be competitive locally and internationally increases customer satisfaction (Con) Expensive Heavy emphasis on documentation - time consuming Large contributions could be required from employees who are meant to uphold these standards.

Question 27

``` Total Quality Management (Def) (Explain) (Pro) (Con) ```

Answer 27

(Def) Total Quality Management is an ongoing business-wide commitment to excellence that is applied to every aspect of the businesses operation by sharing responsibility among all members of the business. (Explain) The aim of TQM is to create a defect free production process and maintain a customer focus in operations. The adoption of TQM can also improve product quality, allowing the business to attain a competitive edge. (Pro) competitive edge increase customer satisfaction (Con) it can be expensive time consuming relies on the full participation of all employees staff will need to be trained in customer service and problem solving will take time to see improvements across the boarder

Question 28

Employee Empowerment: Quality Circles (Def) (Exp)

Answer 28

(Def) Quality Circles are groups of workers who meet to solve problems relating to quality. (Exp) many business use quality circles as a means of achieving employee empowerment. teams of up to 10 workers meet regularly to solve problems related to processes design or quality. groups often make presentations to management with their ideas, in order to improve the businesses performance.

Question 29

Continuous improvement (Def) (Exp) (1 feature)

Answer 29

(Def) Continuous improvement involves an ongoing commitment to achieving perfection. (Exp) Continuous improvement is a process that involves a constant evaluation of, and improvement in, the way things are done in a business. Higher and higher standards are set in continual pursuit of improvement (Kaizen). Kaizen emphasises continuous improvement all facets of the business, from the way the CEO manages to the way assembly line workers perform their jobs.

Question 30

Waste Minimisation: (Def) (Strategies) (Aim)

Answer 30

(Def) Waste Minimisation is the process which the reduction of the amount of unwanted or unusable resources produced by a business in a attempt to improve the efficiency and effectiveness of operations. eg- reusing scrap materials. (Strategies) - Redesigning product and packaging - procurement of materials made from recycled materials - Reusing scrap materials - Improving quality control - Exchanging waste with other businesses - Introducing all system approaches, such as lean production (Aim) demonstrates concern for the natural environment contributing to improving the reputation of the business.

Question 31

Corporate Social Responsibility- CSR | Def

Answer 31

Corporate Social Responsibility is the obligations a business has above and over its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment.

Question 32

CSR aspects: (4 aspects) (features of them) (example)

Answer 32

1. Managing Inputs appropriately - should not have serious impact on the environment - should not create waste - not using cheap materials that impact environment and create waste. - eg. NAB lowers green house emission from its buildings, air travel and vehicle flexes by adding hybrid cars and making environmentally friendly changes to existing cars 2. Managing Suppliers appropriately - sourced responsibly - not to favour suppliers who offer gifts. - eg. NAB introduces Supplier Sustainability Principals to new contracts with Key suppliers stating their CSR requirements including environments 3. Managing Employees appropriately - facilities and technology contribute to the health and safety of employees . - eg. NAB by introducing online health and safety training programs for all of its Australian employees in order to provide positive health and safety culture. 4. Managing Customer appropriately - goods that are produced are of the required quality, safe and reliable - dangerous or defective products can cause harm - eg. Through the StepUP loan program NAB is available to individuals and families living on a low income. as well as its audio-enabled ATM assist those who are visually impaired.

Question 33

Global Sourcing inputs | Def

Answer 33

Global Sourcing is the process of seeking the most cost efficient materials and other inputs, including from countries overseas. eg. "Sunrice"exports rice and rice based products through both locally produced inventory as well as purchasing rice from global sources in order to meet the demand for its rice products.

Question 34

Global Sourcing inputs - Pros and Cons

Answer 34

Pros: - reduces costs - the opportunity to learn how to do businesses in a potential market - Accessing skills or resources that are unavailable domestically - Developing alternative suppliers/ sources of inputs. - Increasing capacity of total supply Con: - Hidden cost associated with different cultures and time zones - Exposure to potential high risk, both financial and political - long lead in times (for manufactured goods) - The risk of ports shutting down and interrupting supply - difficult to monitor the quality of inputs.

Question 35

Global Sourcing inputs - Pros and Cons

Answer 35

Pros: - reduces costs - the opportunity to learn how to do businesses in a potential market - Accessing skills or resources that are unavailable domestically - Developing alternative suppliers/ sources of inputs. - Increasing capacity of total supply Con: - Hidden cost associated with different cultures and time zones - Exposure to potential high risk, both financial and political - long lead in times (for manufactured goods) - The risk of ports shutting down and interrupting supply - difficult to monitor the quality of inputs.

Question 36

Overseas Manufacturing | Def

Answer 36

Overseas manufacturing refers to the production pf a good in a country that is different to the location of the businesses headquarters. eg. Nike uses overseas manufacturers in Indonesia to create their shoe products.

Question 37

(global) Outsourcing | Def

Answer 37

Outsourcing is the contracting a specific businesses operations to an external person or business. eg. The World Health Organisation contracts Apsen Medical to manage their hospitals in Iraq.