section 4

Question 1

production

Answer 1

the effective management of resources in producing goods and services

Question 2

role of operations department

Answer 2

Use the resources in a cost-effective and efficient manner
Manage inventory effectively
Produce the required output to meet customer demands

Question 3

Productivity

Answer 3

measure of the efficiency of inputs used in the production process over a period of time

Question 4

ways to increase productivity and efficiency

Answer 4

improving labour skills by training them so they work more productively and waste lesser resources

introducing automation so that production is faster and error-free

improve employee motivation so that they will be willing to produce more and efficiently

improved quality control and assurance systems to ensure that there are no wastage of resources

Question 5

buffer inventory level

Answer 5

level of inventory the business should hold at the very minimum to satisfy customer demand at all times

Question 6

lead time

Answer 6

The time it takes for the reorder supply to arrive

Question 7

lean production

Answer 7

Lean production refers to the various techniques a firm can adopt to reduce wastage and increase efficiency/productivity.

Question 8

Seven types of waste that can occur in a firm

Answer 8

overproduction
waiting
transportation
unnecessary inventory
motion
over-processing
defects

Question 9

benefits of lean production

Answer 9

less storage of raw materials, components and finished

goods- less money and time tied up in inventory

quicker production of goods and services

no need to repair faulty goods- leads to good customer satisfaction

ultimately, costs will lower, which helps reduce prices, making the business more competitive and earn higher profits as well

Question 10

Kaizen

Answer 10

aims to increase efficiency and reduce wastage by getting workers to get together in small groups and discuss problems and suggest solutions

Question 11

advantages of kaizen

Answer 11

increased productivity
reduced amount of space need for the production process
work in progress reduced

Question 12

Just in Time JIT

Answer 12

eliminates the need to hold any kind of inventory by ensuring that supplies arrive just in time they are needed for production

Question 13

Benefits of JIT

Answer 13

Reduces cost of holding inventory
Warehouse space is not needed any more, so more space is available for other uses
Finished goods are immediately sold off, so cash flows in quickly

Question 14

Cell Production

Answer 14

production line is divided into separate, self-contained units each making a part of the finished good. This works because it improves worker morale when they are put into teams and concentrate on one part alone.

Question 15

job production

Answer 15

products are made specifically to order, customized for each customer

Question 16

Batch Production

Answer 16

similar products are made in batches or blocks. A small quantity of one product is made, then a small quantity of another

Question 17

Flow Production

Answer 17

large quantities of products are produced in a continuous process on the production line

Question 18

Job Production advantages

Answer 18

The product meets the exact requirement of the customer
Workers will have more varied jobs as each order is different, improving morale
very flexible method of production

Question 19

Job Production disadvantages

Answer 19

Skilled labour will often be required which is expensive
Costs are higher for job production firms because they are usually labour-intensive
Production often takes a long time
Since they are made to order, any errors may be expensive to fix

Question 20

Batch Production advantages

Answer 20

flexible way of working- production can be easily switched between products
Gives some variety to workers
More variety means more consumer choice
Even if one product’s machinery breaks down, other products can still be made

Question 21

Batch Production disadvantages

Answer 21

Can be expensive since finished and semi-finished goods will need moving about
Machines have to be reset between production batches which delays production

Question 22

Flow Production advantages

Answer 22

Costs are low in the long run and so prices can be kept low
Can benefit from economies of scale in purchasing
Automated production lines can run 24×7
Goods are produced quickly and cheaply

Question 23

flow production disadvantages

Answer 23

A very boring system for the workers, leads to low job satisfaction and motivation
Lots of raw materials and finished goods need to be held in inventory- this is expensive
Capital cost of setting up the flow line is very high

Question 24

Factors that affect which production method to use

Answer 24

nature of product
nature of demand
size of market
size of business

Question 25

Automation

Answer 25

equipment used in the factory is controlled by computers to carry out mechanical processes, such as spray painting a car body.

Question 26

Mechanization

Answer 26

production is done by machines but is operated by people

Question 27

CAD (computer aided designing)

Answer 27

a computer software that draws items being designed more quickly and allows them to be rotated, zoomed in and viewed from all angles

Question 28

CAM (computer aided manufacturing)

Answer 28

computers monitor the production process and controls machines and robots-similar to automation

Question 29

CIM (computer integrated manufacturing)

Answer 29

the integration of CAD and CAM. The computers that design the product using CAD is connected to the CAM software to directly produce the physical design.

Question 30

EPOS (electronic point-of-sale)

Answer 30

used at checkouts/tills where operator scans the bar-code of each item bought by the customer individually. The item details and price appear on screen and are printed in the receipt. They can also automatically update and reorder stock as items are bought.

Question 31

EFTPOS (electronic funds transfer at point-of-sale)

Answer 31

the electronic cash register at the till will be connected to the retailer’s main computer and different banks - credit cards etc

Question 32

Advantages of technology in production

Answer 32

Greater productivity Greater job satisfaction among workers as boring, routine jobs are done by machines Better quality products Quicker communication and less paperwork

Question 33

Disadvantages of technology in production

Answer 33

Unemployment rises as machines and computers replace human labour Expensive to set up New technology quickly becomes outdated and frequent updating of systems will be needed- this is expensive and time-consuming. Employees may take time to adjust to new technology or even resist it as their work practices change.

Question 34

Fixed Costs

Answer 34

costs that do not vary with output

Question 35

Variable Costs

Answer 35

directly vary with the output

Question 36

uses of cost data

Answer 36

to set prices deciding wether to stop production or continue deciding on the location

Question 37

Economies of scale

Answer 37

the factors that lead to a reduction in average costs as a business increases in size

Question 38

5 economies of scale

Answer 38

purchasing marketing managerial technical financial

Question 39

Diseconomies of scale

Answer 39

he factors that lead to an increase the average costs of a business as it grows beyond a certain size

Question 40

3 diseconomies of scale

Answer 40

poor communication lack of commitment from employees weak coordination

Question 41

Break-even level of output

Answer 41

the output at which total revenue = total costs (neither a profit nor loss is made, all costs are covered).

Question 42

draw a break even chart

Answer 42

google it

Question 43

Advantages of break-even charts

Answer 43

Managers can look at the graph to find out the profit or loss at each level of output Managers can change the costs and revenues and redraw the graph to see how that would affect profit and loss, for example, if the selling price is increased or variable cost is reduced.

Question 44

Limitations of break-even charts

Answer 44

They are constructed assuming that all units being produced are sold. In practice, there are always inventory of finished goods. Not everything produced is sold off. Fixed costs may not always be fixed if the scale of production changes.

Question 45

Quality

Answer 45

to produce a good or service which meets customer expectations

Question 46

importance of quality

Answer 46

establishes a brand image builds brand loyalty maintains good reputation increase sales attract new customers

Question 47

what will happen if there's no quality?

Answer 47

lose customers to other brands have to replace faulty products and repeat poor service, increasing costs bad reputation leading to low sales and profits

Question 48

Quality Control advantages disadvantages

Answer 48

checking for quality at the end of the production process Eliminates the fault or defect before the customer receives it, so better customer satisfaction Not much training required for conducting this quality check Still expensive to hire employees to check for quality Quality control may find faults and errors but doesn’t find out why the fault has occurred, so the it’s difficult to solve the problem if product has to be replaced and reworked, then it is very expensive for the firm

Question 49

Quality Assurance advantages disadvantages

Answer 49

checking for quality throughout the production process of a good or service Eliminates the fault or defect before the customer receives it, so better customer satisfaction Since each stage of production is checked for quality, faults and errors can be easily identified and solved Expensive to carry out since quality checks have to be carried throughout the entire process, which will require manpower and appropriate technology at every stage. employees might not follow the standards or protocols very well and the firm will have to ensure this doesn't happen

Question 50

Total Quality Management (TQM) advantages disadvantages

Answer 50

continuous improvement of products and production processes by focusing on quality at each stage of production workers come together and discuss issues and solutions, to reduce waste ensure zero defects. eliminates all faults before the product gets to the final customer no customer complaints and so improved brand image products don’t have to be scrapped or reworked, so lesser costs waste is removed and efficiency is improved Expensive to train employees all employees Relies on all employees following TQM– they have to be motivated enough to follow the policy

Question 51

How can customers be assured of the quality of a product or service?

Answer 51

They can look for a quality mark on the product like ISO (International Organization for Standardization). The business with these quality marks would have followed certain quality procedures to keep the quality mark. For services, a good reputation and positive customer reviews are good indicators of the service’s quality.

Question 52

why is location important

Answer 52

important because it can affect the firm’s costs, profits, efficiency and the market base it reaches out to

Question 53

Factors that affect the location decisions of a MANUFACTURING firm

Answer 53

Production Method- large or small scale - bigger or smaller area needed Market Raw Materials/Components- factories may need to be located close to where raw materials can be acquired eg. fruits External economies Availability of labour Government Influence Transport & Communication infrastructure Power and water supply climate

Question 54

Factors that affect the location decisions of a SERVICE-sector firm

Answer 54

Customers - near customers technology - don't need to be near customer because they can provide services over the phone etc personal preference of owners availability of labour climate near to other businesses ren/taxes

Question 55

Factors that affect the location decisions of a RETAILING firm

Answer 55

Shoppers nearby shops customer parking rent/taxes Availability of suitable vacant premises Security Access to delivery vehicles

Question 56

Why do businesses locate in different countries?

Answer 56

New markets overseas. Cheaper or new raw materials available in other countries. Cheaper and/or skilled workers are available overseas. Rent/ taxes are lower.. Availability of government grants and other incentives

Question 57

role of legal controls on location decisions

Answer 57

to encourage businesses to set up and expand in areas of high unemployment and under-development. Grants and subsidies can be given to businesses that set up in such areas. to discourage firms from setting in areas of that are overcrowded or renowned for natural beauty. Planning restrictions can be put into place to do so.