operations management test

Question 1

Operations Management :

Answer 1

refers to the business function of combining inputs to produce outputs (goods and services) that are valued by consumers

Question 2

Inputs:

Answer 2

Available resources of the organization such as land, labor, capital, enterprise

Question 3

Processing:

Answer 3

adding value

Question 4

outputs:

Answer 4

The outputs of products (goods and services)

Question 5

lean production;

Answer 5

the process of streamlining operations and processes to reduce all forms of waste and to achieve greater efficiency. Leads to improved quality and reduced costs

Question 6

CSR

Answer 6

corporate social responsibility refers to the corporation’s obligations to society at large as well as the environment. It is important as companies prioritizing csr are proactive in seeking ways to improve society through their business activities.

Question 7

triple bottom line:

Answer 7

Is the combination of economic sustainability, social sustainability and ecological sustainability.

Question 8

feedback loops (including downstream):

Answer 8

is the process in which the outputs of a system are circled back and used as inputs refers to the process of using customer or employee feedback to create better products/workplace.

Question 9

Job production:

Answer 9

is the production of a special or customized good or service suited to the specific requirements of an individual customer. (one-off unique good or service) labor intensive and expensive.

Question 10

Batch Production:

Answer 10

is a production method that involves identical goods being made in groups (batches) rather than a continuous flow.

Question 11

lead time:

Answer 11

Refers to the length of time it takes between a firm ordering new stock and the firm ordering new stock and the firm receiving the stock for production.

Question 12

buffer stock (minimum):

Answer 12

is the minimum stock level held by a firm in case of late deliveries from suppliers, damaged stock or sudden and expected increase in demand.

Question 13

re-order level:

Answer 13

refers to the stock level at the time when the firm places its re-order of stock.

Question 14

usage rate :

Answer 14

is the speed at which inventories are depleted in the production process. It increases during peak-periods but drops during recession and off-peak periods.

Question 15

Stockpiling:

Answer 15

means that a business builds up excessive levels of inventory. Holding too much stock results in working capital being tied up.

Question 16

JIT

Answer 16

Just in time stock control system is designed to eliminate the cost of holding stock ex; stock maintenance security costs

Question 17

JIC

Answer 17

Just in case stock control is designed to have a reserve (buffer) stock level. It ensures the firm has enough inventory to meet the demands of customers whenever required.

Question 18

Quality Control (fulfill purpose & expectations - so not exclusive to expensive products)

Answer 18

Quality means that a product fulfills its purpose and meets the expectations of the consumers. Hence, quality is not exclusive to expensive products.

Question 19

Advantages & Disadvantages of Quality Management

Answer 19

Advantage: Prevents faulty products and so safeguards the firm’s reputation.
Disadvantage: Individuals are not accountable for the quality of their work, so slack is encouraged.

Question 20

Lean Production (limit time, energy, effort, material WASTE):

Answer 20

Removing all the operations or processes that don’t add any value to the product (making efficient use of resources). Right time approach; it’s easier to prevent mistakes than to try to correct them.

Question 21

kaizen

Answer 21

The kaizen process involves forming small groups of employees whose role is to identify changes and improvements to the organization’s products, processes and procedures. THE AIM is to establish a steady flow of small improvements rather than one big radical change.

Question 22

kanban

Answer 22

The Kanban method is a method of lean production created to insure that inventory is based on actual customer orders rather than sales forecasts. A typical kanban card shows operatives what is to be produced, what quantity and when it needs to be made. (ex; ordering sushi)

Question 23

Outsourcing / subcontracting:

Answer 23

Is the practice of subcontracting non-core activities of an organization to a third party provider (an external organization) in order to improve operational efficiency and reduce costs. -» cuts costs and gain from the third-party’s expertise (ex security)

Question 24

Offshoring

Answer 24

is the practice of relocating part or all of a firm’s business functions and processes overseas. These functions can remain within the business (operating in an overseas market) or outsourced to an overseas organization. (ex manufacturing, call centers…)

Question 25

Insourcing

Answer 25

is the use of a firm’s own resources to fulfill a certain role or task which would otherwise have been outsourced.

Question 26

break-even analysis.

Answer 26

Analysis that helps finding the point at which total revenues equal total costs

Question 27

Total Cost =

Answer 27

Fixed Costs + Variable Costs

Question 28

profit=

Answer 28

Total Revenues - Total Costs

Question 29

break-even=

Answer 29

Total Revenues - Total Costs = 0

Question 30

unit contribution=

Answer 30

price (Average Revenue) - Average Variable Costs

Question 31

Break-Even Quantity=

Answer 31

Total Fixed Costs / Unit contribution

Question 32

Opportunity Cost:

Answer 32

Opportunity cost represents the potential benefits that a business, an investor, or an individual consumer misses out on when choosing one alternative over another.

Question 33

Cost-to-Buy vs. Cost-to-Make:

Answer 33

A make or buy decision involves managers choosing whether to manufacture a product in house (make) or to purchase it from a third party subcontractor (in other words, insourcing or outsourcing)

Question 34

Cost to buy:

Answer 34

Using third party suppliers can create flexibility and capacity for the business, such as dealing with unexpected fluctuations in the level of demand. Subcontractors may also be more productive and cost effective. Cost to buy= price x quantity

Question 35

Cost to make :

Answer 35

in house production enables the organization to have a closer control over costs and quality. It also allows the business to have better overall management of the production process. Cost to make= total fixed costs + total variable costs.

Question 36

Supply Chain:

Answer 36

Supply chain management is the handling of the entire production flow of goods or services—starting from the raw components to delivering the final product to consumers.

Question 37

crisis

Answer 37

a crisis can be defined as any unpredicted event that has widespread negative consequences. In the business context, it means a crisis causes major disruptions to the normal operations of an organization.

Question 38

CRISIS MANAGEMENT:

Answer 38

is about the response a business takes in the event of an actual threat, disaster or crisis. It is about the way in which a business reacts during a real crisis. This is particularly important if the crisis is major enough to threaten the survival of the business.

Question 39

CONTINGENCY PLANNING:

Answer 39

Is about devising and developing pre-arranged plans to deal with a crisis, in case it actually occurs. It involves the use of risk assessments in order to better prepare for a crisis, such as fire, should it ever happen