Role of Operations Management

Question 1

What does strategic mean in relations to business operations

Answer 1

Affecting all key business operations’

Question 2

How is maximised profits achieved

Answer 2

Focusing on revenue maximisation and cost minimisation

Question 3

What is the main business goal

Answer 3

Maximise profits

Question 4

What are the two aspects of operations management

Answer 4

• Cost leadership
• Good/service differentiation

Question 5

What are the different costs in business

Answer 5

• Input costs
• Labour costs
• Processing
• costs of getting products to markets
• Costs associated with inventory management
• Quality management costs

Question 6

What are input costs

Answer 6

• Facilities
• Land
• Energy

Question 7

What are labour costs

Answer 7

Full-time and part-time employees

Question 8

What are processing costs

Answer 8

Machinery, Electricity and scheduling

Question 9

What’s an example of costs associated with inventory management

Answer 9

• Logistics and distribution, damaged goods

Question 10

What’s an example of quality management costs

Question 11

What is cost-leaderhsip

Answer 11

Cost leadership is aiming to have the lowest costs and to be the most price-competitive in the market

Question 12

What are strategies to reduce costs

Answer 12

• Economies of scale
• Control production costs
• Control other costs
• Technology
• Standardisation

Question 13

What’s an example of ‘other’ costs

Answer 13

R&D/marketing

Question 14

What are examples of production costs

Answer 14

• Labour
• Raw material
• Overheads (plant, equipment, power

Question 15

What is economies of scale

Answer 15

Economies of scale are cost advantages reaped by companies when production becomes efficient

Question 16

How is economies of scale achieved

Answer 16

Increasing production and lowering costs thus spreading costs over a larger number of goods

Question 17

What does economies of scale result in

Answer 17

Lower per unit costs

Question 19

What does standardisation involve

Answer 19

The making of products that are homogeneous or identical.

Question 20

What other strategy to reduce costs does standarisation directly relate to

Answer 20

Economies of scale

Question 21

What does product differentiation mean

Answer 21

Distinguishing products in some way from those of competitors

Question 22

What might product differentiation for goods include

Answer 22

• Varying the actual product features
• Varying product quality
• Varying augmented features

Question 23

What might product differentiation for services include

Answer 23

• Varying the amount of time spent on a service
• Varying the level of expertise brought to a service
• Varying the qualifications and experience of the service provider
• Varying the quality of materials/technology used in the service delivery

Question 24

What 2 features of goods will influence operations decisions

Answer 24

• Standardised or customised
• Perishable or non-perishable

Question 25

What are intermediate goods

Answer 25

Goods which are processed more than once

Question 26

What are 2 features of standardised goods

Answer 26

* Mass produced * Uniform and meet a predetermined level of quality

Question 27

What are features of customised goods

Answer 27

* Varied according to the needs of customers * Produced with a market focus rather than a production focus.

Question 28

What's an example of a service which has been customised

Answer 28

Fast food industry

Question 29

How does operations relate to marketing

Answer 29

* Marketing Identifies customers’ wants; create a marketing mix and assist operations through the design of new products, change existing products and after-sales service requirements

Question 30

How do operations and finance relate

Answer 30

* Finance department must plan, organise, monitor and control financial resources * set financial controls for each part of operations; monitor progress * Pay staff and accounts

Question 31

How does operations relate to HR

Answer 31

* Manages human effort at every stage of production, core and non-core activities * Identify staffing needs, training, organise staff during operations to meet objectives

Question 32

Case study for good/service differentiation

Answer 32

* Apple differentiates product through its IOS operating system and unique features, 2014 Apple introduced Apple pay * However, 2012 Apple lost position as highest selling smart phone to Samsung due to a lack of innovation and increased competition * Apple also differentiates its product through quality, iPhones are marketed as a premium product

Question 33

Case study for cost leadership

Answer 33

* Apple lowers production costs by forming partnerships with manufacturers such as Foxconn in China where labour and materials are much cheaper * Helps Apple achieve economies of scale * Introduced lower costs products such as iPhone 5c and iPhone SE

Question 34

Case study on goods/services in different industries

Answer 34

* Apple’s iPhones are mass produced on a production line and are hence standardised and non-perishable

Question 35

Case study on standardised services

Answer 35

* McDonald’s has standardised the service of fast-food through offering set menus and staff have specific role and use specific lines * Also implemented mass customisation through programs such as ‘create your taste’

Question 36

Case study for interpendnece of key business functions

Answer 36

* Market research indicated the popularity of phablets in Asia led to the design and development of larger iPhones * When US President Trump began threatening to impose tariffs on Chinese imports, Apple’s profitability was threatened due to its dependence on Chinese outsourcing partners for operations à thus affecting Apple’s finance * HRM is in charge of hiring employees and thus affects operations * à2014 Foxconn hired additional 100,000 staff for production of iPhone 6 and 6s

Question 37

Outline the role of operations syllabus

Answer 37

1. Stratgic role of operations (cost leadership, product differentiation) 2. Goods and/or services in different industries 3. Interdependence with ither key business functions