unit 3 aos 3 (sac 1)

Question 1

define operations management

Answer 1

The coordination and organisation of the activities involved in producing the goods or services that a business sells to it’s customers. It is concerned with transforming inputs into outputs of finished products that a business sells to it’s customers.

Question 2

how does operations management contribute to a business achieving it’s objectives?

Answer 2

it aims to reduce the amount of time taken in producing a good or service with the fewest possible resources, without impacting the overall quality of the final product

Question 3

what is efficiency and how is it used by operations managers when achieving business objectives?

Answer 3

how productively a business uses it’s resources when producing a good or service

operations managers aim to maximise productivity to improve levels of efficiency, by using strategies like technological developments, materials strategies, quality strategies, and waste minimisation strategies, which results in production costs being minimised, levels of waste decreasing, and time taken to produce goods being reduced, ultimately improving performance and achievement of objectives

Question 4

what is effectiveness and how it is used by operations managers when achieving business objectives?

Answer 4

the extent to which a business achieves it’s stated objectives

operations managers can select the most suitable strategies to aim to lower production costs, improve quality, and reduce wastage, which ensures customers are provided with high quality at the best possible price, making them more likely to purchase products in the future, increasing sales and profitability

Question 5

how does operations management contribute to the objective making a profit?

Answer 5

by implementing technology into the production process, which reduces the number of employees required, reducing labour expenses and increasing profit

Question 6

how does operations management contribute to the objective increase market share?

Answer 6

by checking that the products produced are not faulty, they can improve the quality of the product, increasing customer satisfaction and the business’ proportion of sales in it’s industry

Question 7

how does operations management contribute to the objective meet shareholder expectations?

Answer 7

by creating a website for customers to purchase goods and services, online sales increase, leading to higher levels of profit and higher dividends for shareholders

Question 8

how does operations management contribute to the objective fulfil a market need?

Answer 8

by designing innovative products, which fulfil unmet needs in the market

Question 9

how does operations management contribute to the objective fulfil a social need?

Answer 9

by reducing wastage in the production process, minimising the business’ impact on the environment

Question 10

what are the three key elements of a business’ operations system?

Answer 10

• inputs
• processes
• outputs

Question 11

what are inputs? give examples

Answer 11

the resources used by a business to produce goods and services. Businesses select inputs that are best suited to helping them produce the best quality good or service.

e. g.
- labour resources (employees)
- raw materials
- equipment and machinery
- time
- electricity
- information
- money

Question 12

what are processes? give examples

Answer 12

the actions performed by a business to transform inputs into outputs

e. g.
- mixing
- designing
- baking
- computing
- assembling
- constructing

Question 13

what are outputs?

Answer 13

the final goods or services produced as a result of a business’ operations system which are delivered or provided to customers. The quality of outputs are impacted by the inputs and processes in a business’ operations system.

Question 14

what are ‘manufacturing’ businesses?

Answer 14

businesses that use raw materials and resources to produce a finished physical good

Question 15

what are ‘service’ businesses

Answer 15

businesses that provide intangible products, usually with the use of specialised expertise

Question 16

list the characteristics of a manufacturing business

Answer 16

production process = capital intensive

occurance of production and consumption = seperate times

customer contact = low degree (production stage is separated from customer)

tangibility = tangible

storability = can be stored as inventory

consistency = goods can be standadised through mass production

Question 17

list the characteristics of a service business

Answer 17

production process = labour intensive

occurance of production and consumption = occurs simultaneously

customer contact = high degree (production and consumption occur simultaneously)

tangibility = intangible

storability = cannot be stored as inventory

consistency = not standardised, but tailored specifically to individual customer needs

Question 18

list the similarities between manufacturing and service businesses

Answer 18

• both transform inputs into outputs
• both aim to produce high quality outputs at a low cost of production
• both have to deal with customers and suppliers
• both can utilise forms of technology in their operations systems
• both aim to optimise efficiency and effectiveness

Question 19

list the differences between manufacturing and service businesses

Answer 19

• manufacturing is capital intensive, service is labour intensive
• occurence of production and consumption occurs separately in manufacturing, simultaneously in service
• degree of customer contact is low in manufacturing, high in service
• manufacturing produces tangible outputs, service intangible
• manufacturing outputs can be stored as inventory, service outputs cannot
• manufacturing has standardised production, service has tailored production

Question 20

what is productivity? how do operations managers optimise it?

Answer 20

the overall measure of a business’s ability to transform inputs into outputs.
the more efficient an organisation is in turning inputs into outputs, the higher the rate of productivity.

In order to improve productivity the operations manager must ensure the most efficient use of inputs; to get the highest output possible from the inputs used.

Question 21

what is business competitiveness? how do operations managers optimise it?

Answer 21

A business’ ability to match or better it’s rivals in it’s particular market by competing on cost, quality, and delivery. It is based on increased levels of productivity in the business.

Operations managers can compete on cost by eliminating waste, quality by reducing the number of defects in the production process and customer complaints, and delivery by quickly getting the product or service to the customer.

Question 22

what is supply chain management? (include an outline of the businesses in the supply chain)

Answer 22

the coordination of the flow of goods and services from raw materials to delivering final products to customers.
the materials or products may have to be delivered within a specific time period so that processes flow continuously between suppliers, manufacturers, wholesalers and retailers.

Question 23

what is global sourcing of inputs?

how would it benefit a business?

Answer 23

acquiring raw materials or resources from overseas suppliers.

overseas suppliers may be able to sell raw materials at a much lower price than they are sold for in australia due to lower operating costs like wages, which reduces the cost of business’ raw materials

Question 24

list the advantages of global sourcing of inputs

Answer 24

• able to source materials which are not readily available in the country of operations
• able to source resources of a higher quality which allows the business to better meet customer expectations
• improves access to cheaper raw materials, reducing the cost of production

Question 25

list the disadvantages of global sourcing of inputs

Answer 25

- imports may be affected by quotas imposed by governments (a limit on the number of items that can be imported / exported) - may be difficult to communicate with suppliers due to language barriers - may be difficult to monitor the activities of suppliers due to different time zones and locations - materials may be damaged during delivery - may reflect badly on a business' reputation if a supplier does not treat their employees in an ethical manner - delivery may be time consuming depending on where supplies are being sent from - may increase the expenses of a business due to tariffs (taxes paid to a government for particular imports / exports)

Question 26

what is overseas manufacture? how would it benefit a business?

Answer 26

producing goods or services in a location outside of a business' headquarters country businesses may implement it by setting up their own manufacturing plant overseas to produce high quantities for a lower price

Question 27

list the advantages of overseas manufacture

Answer 27

- can improve access to skilled employees who have expertise in production - can lower prices for products, increasing customer sales and satisfaction - can improve production speed due to the expertise of overseas employees - can improve access to cheaper labour and reduce business costs - setting up a manufacturing plant overseas may be less costly than a local factory

Question 28

list the disadvantages of overseas manufacture

Answer 28

- finished goods may be damaged during delivery - poor CSR practises in the country may reflect badly on the business (e.g. child labour) - local employees are likely to lose their jobs due to a business moving manufacturing overseas - delivery can be time consuming depending on where manufacturing occurs - poor communication and language barriers may lead to multiple delays

Question 29

what is global outsourcing? how would it benefit a business?

Answer 29

transferring specific business activities to an external business in an overseas country (e.g. a business outsourcing it's finance activities to an accounting business) this means a business has access to a much larger number of external businesses with specific expertise

Question 30

list the advantages of global outsourcing

Answer 30

- can improve the quality of business activities as the external business may be experts in the area - allows the business to allocate more resources and focus towards their own areas of expertise - productivity may increase as the external business has expertise to complete tasks efficiently - able to save on costs associated with labour by reducing the need for local employees

Question 31

list the disadvantages of global outsourcing

Answer 31

- reduced control over the business as some activities have been transferred to external businesses - may be difficult to communicate with external overseas businesses due to language barriers - the quality of service from external businesses may be negatively affected if it is servicing multiple customers - poor CSR practised performed by the external business may reflect badly on the business' reputation - local employees from the business' main operating country are likely to lose their jobs - poor communication and language barriers with the external business may lead to delays

Question 32

give the similarities and differences between global sourcing of inputs and global outsourcing

Answer 32

SIMILARITIES: - allocate certain business tasks to external businesses DIFFERENCES: - global sourcing of outputs acquires suppliers overseas for manufacturing, while global outsourcing involved certain business activities like I.T services being completed

Question 33

give the similarities and differences between global sourcing of inputs and overseas manufacture?

Answer 33

SIMILARITIES: - ensure that the correct materials of the right quality are acquired - products or raw materials travel between countries during delivery DIFFERENCES: - global sourcing of outputs acquires suppliers overseas for manufacturing, while overseas manufacture means the manufacturing phase occurs overseas

Question 34

give the similarities and differences between global outsourcing and overseas manufacture?

Answer 34

SIMILARITIES: - produce goods or activities in a location seperate from the business' main office DIFFERENCES: - global outsourcing means the business has little control over the transferred activities, while overseas manufacture means the business retains control of operations

Question 35

define corporate social responsibility

Answer 35

the ethical conducts of a business beyond it's legal obligations to improve the social, economic and environmental outcomes of stakeholders. It is not necessary for a business to do, but performing CSR improves a business' reputation.

Question 36

list the CSR considerations for inputs in the operations system

Answer 36

- sourcing from local suppliers instead of overseas suppliers to reduce transport emissions - sourcing from suppliers that use environmentally sustainable methods with regards to natural resources - implementing forecasting and 'just in time' to reduce the risk of over ordering inputs that may later be discarded - purchasing energy efficient machinery to be used in production - installing reusable and clean energy sources

Question 37

list the CSR considerations for processes in the operations system

Answer 37

- using technology that perform processes in a precise and consistent manner to reduce waste generated from errors - developing methods to capture and recycle excess input materials to be reused in production and place them back into the input element of the operations system - implement 'just in time' and lean management strategies to reduce unnecessary materials waste - removing harmful chemicals from waste products - disposing of any harmful waste that cannot be treated safely

Question 38

list the CSR considerations for outputs in the operations system

Answer 38

- developing an alternative product that is environmentally friendly - creating products that have recyclable elements at the end of their lifecycle - eliminating as much plastic as possible in the packaging and creation of the final product - delivering products in bulk to retailers to reduce the business' carbon emissions from transportation - offering customer incentives for returning the product at the end of it's lifecycle so it can be recycled properly

Question 39

list the global considerations in operations management

Answer 39

- global sourcing of inputs - overseas manufacture - global outsourcing