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Higher Business Management > Unit 3 - Operations > Flashcards

Unit 3 - Operations Flashcards

(61 cards)

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1
Q

What is Just In Time?

A

The business holds almost zero inventory.
Materials are order and products are assembled JUST IN TIME.
Must be a close relationship between manufacturer and supplier for it to work.

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2
Q

How are JIT figures calculated?

A

Nothing is produced unless customers are demanding the product.
Marketing department predicts the expected demand and figures
OR
The business waits until there is demand.

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3
Q

JIT advantages?

A

Capital is not tied up in stock so can be used elsewhere
More responsive to customer demand
Reduction in storage costs

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4
Q

JIT disadvantages?

A

Production is disrupted if products do not arrive on time.
High dependency on suppliers.
May lose bulk-buying discounts.
No room for error.

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5
Q

What is optimum stock level?

A

Storage costs are at a minimum level but there is enough inventory to meet requirements.

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6
Q

What could happen if a business understocks?

A

Production could stop
Customer complaints due to not receiving orders on time
Business could gain bad reputation

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7
Q

What could happen if a business overstocks?

A

Increased costs for security and storage
Waste of stock due to it becoming out of date
Higher risk of stock being stolen

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8
Q

What is the purpose of an inventory management system?

A

Ensure there is enough stock available when it is needed
Ensure production does not stop
Avoid stock deterioration

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9
Q

What is a lead time?

A

Time that passes between ordering stock and it arriving

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10
Q

What is re-order level?

A

The quantity at which more inventory is ordered.

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11
Q

What is maximum stock level?

A

The highest amount of inventory that can be stored

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12
Q

What is buffer inventory?

A

A safety supply of around 100 items that are held in case deliveries are delayed or there is an unexpected large order.

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13
Q

What is re-order quantity?

A

The quantity that is re-ordered to bring levels back to the maximum.

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14
Q

What is minimum stock level?

A

The lowest amount of stock that should be stored at one time.

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15
Q

What does the type of storage used by a business depend on?

A

The type of stock
Finance available for storage
Size and location of customers
Accessibility

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16
Q

What is centralised storage?

A

This involves storing inventory in 1 central location – a large warehouse.

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17
Q

What is decentralised storage?

A

This involves storing inventory in various locations within the organisation. Each branch or department is responsible for ordering and maintaining its own inventory. E.g. Tesco

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18
Q

What are advantages of centralised storage?

A

Can store large amounts, therefore can receive bulk buying orders

May be cheaper

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19
Q

What are disadvantages of centralised storage?

A

Specialist staff are hired so costs increase

The cost of a warehouse is high

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20
Q

What are advantages of decentralised storage?

A

Inventory is always close by when required

Smaller stores are more responsive to local needs

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21
Q

What are disadvantages of decentralised storage?

A

Can face consequences of under-stocking

Security isn’t as tight due to lack of specialist

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22
Q

What is logistical management?

A

How the product is transported and distributed from the manufacturing site to the customer/store.

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23
Q

What are examples of methods of distribution?

A

Road
Rail
Air
Sea

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24
Q

What is capital intensive?

A

Where the production process relies more on machinery and equipment than human input.

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25
Capital intensive advantages?
Can work 24/7 Standardised quality Fewer employees
26
Capital intensive disadvantages?
Machinery/equipment is expensive | Breakdowns can cause production to stop and can be expensive
27
What is labour intensive?
This is where a business uses a larger proportion of human input than machinery.
28
Labour intensive advantages?
No expensive equipment | Unique products
29
Labour intensive disadvantages?
Expensive and time consuming to recruit and train Training takes time Quality can vary (mistakes)
30
What is batch production?
Capital intensive Groups of identical products being made at one time
31
What is flow production?
Capital intensive Identical products being made along a production line Continuous output or identical products
32
What is job production?
Labour intensive Company produces single product or small number of products to specific requirements One job is finished before another is started
33
What factors are considered when choosing a method of production?
The skills of the workforce Finance available Technology available
34
What can capital intensive production either be?
Automation or mechanisation
35
What is automation?
Refers to the production being fully automated, uses CAM (computer aided manufacture)
36
What is mechanisation?
Refers to labour and machines working together on the production of a product.
37
How do businesses ensure quality?
Using quality control or quality assurance methods
38
What is quality control?
Where raw materials are inspected or finished goods are inspected to check that they are of an acceptable standard before sale
39
What is quality assurance?
A method of prevention where products are checked for quality at different stages of the production process.
40
Advantages of quality control?
Ensures no faulty goods are sent out to customers Limits the potential for bad reputation Cheap method of ensuring quality
41
What are disadvantages of quality control?
Can create a lot of waste as products are not checked until they are made Faulty products thrown away
42
Quality assurance advantages?
Less wastage which reduces costs Easy to identify where the faults are occurring on the production line
43
Quality assurance disadvantages?
Can slow down production process due to all the checks
44
What is benchmarking?
When a business compares its products with the best in the industry The business will aim for these standards
45
What are advantages of bench marking?
If successful, the product will be as good as the ‘best’ on the market
46
What are disadvantages of benchmarking?
Can be difficult to gain competitors information When the ‘best’ improves, the business will be left behind.
47
What is quality circles?
When a group of employees meet to discuss problems in the production process
48
What are advantages of quality circles?
Employees will be motivated as they have a say in the decision-making
49
Disadvantages of quality circles?
Employees meet during a working day therefore production time is lost Suggestions are not always feasible therefore time is wasted
50
Advantages of ethical operations?
Attract customers who agree with the principles Ensure the safety and welfare of employees and animals Improves reputation Can be awarded awards
51
Disadvantages of ethical operations?
Decision making can be time consuming Audits are needed to ensure standards are met and maintained
52
What are examples of environmental operations?
Reducing waste Recycling Minimising packaging Using low emission vehicles for deliveries/reducing carbon footprint.
53
Advantages of ethical operations?
The business can gain a positive reputation Awards can be awarded Renewable energy can save money
54
Disadvantages of environmental operations?
Investment in environmentally friendly measures will initially be expensive eg solar panels Can be time consuming to change
55
What technology can be used in operations?
``` Barcodes EPOS Internet Email E-commerce etc ```
56
What are advantages of technology?
Works faster than humans Consistent quality and accurate Reduces staffing costs
57
What are disadvantages of technology?
Initial costs are high Staff training is costly and requires regular updates
58
Costs of CAD?
Initial cost is high Staff need to be trained in how to use the software
59
What are the benefits of CAD?
More accurate | Faster
60
CAM costs?
High initial cost Production will stop if anything breaks
61
CAM benefits?
Improved efficiency Improved accuracy Predictable speed of production

Higher Business Management (6 decks)

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