Unit 4 Flashcards
(121 cards)
1
Q
what is meant by operations?
A
operations is responsible for the actual production of goods and services. by transforming inputs to outputs. an important concept to this process is added value
2
Q
what is added value?
A
the value of the final output will be greater than the value of all the inputs added together. added value enables profit to be made
- operational target
3
Q
what is operational management?
A
key factor in the transformation process = creating its products and services
4
Q
what is the importance of operations?
A
- meet demand
- add value
- control production costs
- guarantee right level of quality and service
- adapt to customer needs
- enable ethical and environmental objectives
5
Q
what are operational objectives?
A
targets a business sets in order to produce goods or services in the most efficient way in a given period of time. must fit with overall corporate objectives.
6
Q
what are common targets/ objectives set by operations?
A
- dependability
- ethical and environmental
- speed of response and flexibility
- quality
- reduced unit cost
- added value
7
Q
what is involved in dependability?
A
How reliable the business is at satisfying customer needs. involves the right product, right quality, right quantity and right customer on time. Efficiency
8
Q
what is involved in ethical / environmental objectives?
A
minimise the effects of operations on the environment and employees. this can be quantifiable for the business to measure their performance against
9
Q
how can environmental objectives be achieved?
A
setting projects / targets such as zero carbon emission in production
10
Q
what is involved in speed of response and flexibility objective?
A
speed that customer needs are met and ability to tailor to meet needs. in order to differentiate the business to gain competitive advantage
11
Q
how can speed of response and flexibility be achieved?
A
- meeting delivery agreements
- avoiding negative publicity
- adapting level of output to demand
12
Q
what is involved in quality objective
A
a minimum acceptable standard in terms of quality of raw materials, processes, output and customer service. high quality can benefit business reputation and give competitive advantage and enable charging premium prices
13
Q
how can increased quality be achieved?
A
taking on customer feedback and complaints to improve
14
Q
what is involved in reduced unit cost objective?
A
support strategy of cost minimisation. with lowest unit cost business can compete by offering lower prices or make higher profit margins. but can’t compromise other objectives
15
Q
how can reduced unit costs be achieved?
A
- increasing scale to benefit from economies of scale
- reduce fixed / variable costs
16
Q
what is involved in added value objective?
A
ability to ensure value of the output is higher than value of input
17
Q
what are internal influences on operational objectives?
A
- corporate objectives
- financial state
- HR
- marketing issues
18
Q
what are external influences on operational objectives?
A
- economic environment
- competitors efficiency and flexibility
- tech changes
- legal and environmental change
19
Q
what is operations data?
A
quantifiable information that will allow a business to measure performance and help inform decision making on how best to improve operational performance
20
Q
what is capacity?
A
the maximum output achievable by a business using current resources.
21
Q
what is labour productivity?
A
a measure of how efficient the workforce is in transforming inputs to outputs
22
Q
what is the equation for labour productivity?
A
total output / number of employees
23
Q
what are the factors influencing labour productivity?
A
- quality of equipment
- training given to staff
- skills and motivation of staff
- method of production
- reliability of suppliers
24
Q
what is unit cost?
A
average cost of each unit produced
25
what is the equation for unit cost?
total cost / total output
26
what is capacity utilisation?
the proportion of maximum capacity that is currently being used
27
what is the equation for capacity utilisation?
(actual output / maximum output) x 100
28
what is economies of scale?
the cost advantage that a business can exploit by expanding their scale of production. it reduced average unit costs of production
29
how can capacity utilisation data be used in decision making?
- is it correct capacity level for demand and profit targets?
- if they should increase or downsize (retrench) to avoid excess capacity and costs
30
what type of economies of scale are used for cost saving?
- bulk- buying
- technological economies of scale
- specialisation of the workforce
- marketing economies of scale
- managerial economies of scale
31
what is bulk-buying economies of scale?
buying materials in large quantities, resulting in lower prices because of their market power and because its cheaper for suppliers to do one large order to reduce transportation costs and time.
32
what is technical economies of scale?
afford to invest in specialist capital machinery that can improve efficiency and ensure quality
33
what is specialisation of the workforce economies of scale?
split complex production processes into separate tasks to boost productivity. by specialising in specific tasks the workforce increases output
34
what is marketing economies of scale?
can spread its advertising and marketing budget over a large output with sufficient negotiation power in the market.
35
what is managerial economies of scale?
supervision of production systems, manage marketing systems and oversee HR.
36
how can a business improve low levels of labour productivity?
- recruit skilled staff
- better training of staff
- reward staff for achieving targets
- set targets for each employee
37
how can a business improve high unit costs?
switch to cheaper suppliers
38
how can a business improved low capacity?
- invest in quality machinery
- move to bigger factory or expand
- subcontract other production
39
how can a business improve low capacity utilisation?
- downsize to reduce capacity
- find an easier production process
40
what does increasing efficiency mean?
getting more output from a given level of output. using minimun resources to achieve maximum output. directly linked to unit cost and key route to maximising profits
41
what are way to increase efficiency and labour productivity?
- invest in tech
- improve training
- job redesign
-introduce new reward systems
- improve recruitment process
- task specialisation
- introduce netter management
42
what is the relationship between labour productivity and unit cost?
- as labour cost goes up, unit cost goes down
- assuming no change in pay
43
what is task specialisation?
when employees repeat tasks everyday they develop proficiency, making them faster and more accurate
44
what is job redesign?
involves changing the content of a job in terms of duties and responsibility to make it more interesting. resulting in motivation, engagement and productivity
45
what are the risks of increasing productivity in the long term?
- cause burn out and stress
- compromises quality, customer service and innovation
- demand for higher wages
- increased labour turnover
- increased waste
46
how can a business improve low capacity utilisation?
- increase promotions
- find ways to reduce unit cost
- new market
- outsource
- downsize or retrench
47
what is under- utilisation?
when a business' resources are not being used at or close to full capacity, resulting in high unit costs than necessary for unneeded wage costs...
48
what is over- production?
producing too many goods
49
what are the benefits of constantly operating at high capacity?
- lower unit cost
- highest level of profitability
- maximum use of resources and highest level of efficiency
50
what are the drawbacks of constantly operating at high capacity?
- loss of flexibility
- strain on machines
- no time for repair or maintenance
- possible quality issues
- risk of missing deadlines
51
what is lean production?
a practice that reduces waste in operations. the main forms of lean production are focused on reducing defects, time wasted and inventory levels. a key feature is just in time (JIT)
52
what types of waste are there in operations?
- transport
- extra processing
- *inventory
- defects
- waiting time
- over production
- motion
53
what is motion as a waste in operations?
producing products that can't be sold easily
54
what is JIT production?
aims to ensure inputs only arrive when they are needed. if implemented successfully, stock levels of inputs are kept to a minimum.
55
what are the advantages of JIT?
- cost reduction = rent and insurance
- less working capital tied up in stocks
- low risk of stock perishing or damaged
- emphasis on getting work right the first time
56
what are the limitations of JIT?
- little room for mistakes
- reliant on delivery from suppliers being on time and flexible = trust and relationship
- may require smaller frequent orders = miss out on economies of scale
- complex stock systems
- no spare for change in demand
57
what is Just in case production?
used by companies that can't easily forecast demand. by purchasing stock in excess they can ensure flexibility and change in production.
58
what is time-based management?
general approach that recognises the importance of time and seeks to reduce wasted time in production
59
what are the benefits of time- based management?
- quicker response times = lower lead times and meets change in market and demand
- faster product development
- reduce waste
- efficiency
60
what is cell production?
form of team working where production processes are split into cells or teams that are responsible for completion
61
what is Kaizen?
concept of continuous improvement to increase efficiency, staff are empowered to suggest changes that could lead to a reduction in waste
62
what does lean production lead to?
the reduction of waste leads to efficiency or productivity increases which leads to decrease in costs and increase in revenue
63
what is a labour intensive business?
that uses people to produce their goods or services rather than machines
64
what is a capital intensive business?
production using mainly capital resources (machines and computers) ...
65
what are the advantages of labour intensive?
- cheaper for small scale production
- support Kaizen structures
66
what are the disadvantages of labour intensive?
- need breaks/ human needs / laws
- recruitment costs
67
when is it appropriate to use labour intensive?
- small scale
- in lower wage countries
- for bespoke products
68
what resources are factors in production?
- land
- labour
- capital
- enterprise
69
what are the advantages of a capital intensive business?
- don't have the same needs as labour = not reliant on motivation, needs of staff to ensure efficiency
- more cost effective in long term
70
what are the disadvantages of a capital intensive business?
- initial cost
- inflexible
71
when is it appropriate to use capital intensive?
- sufficient finance
- product is standardised
- produce in countries with high wages
72
what is technology in operations?
use of tools, machinery and computers to help produce a good or a service
73
what is CAD?
Computer aided design- manufacturers use to design products
74
what is CAM?
Computer aided manufacture - where manufacturers use robots in production process
75
how can more advanced computer systems benefit operations?
- automated stock control
- electronic data control
76
how can the internet enhance a business?
help promote and sell products and ability to communicate with customers
77
whats the benefit of robotics in production
speeds up production and reduce human error
78
what is cloud storage of information?
data accessible from one point enabling flexible working
79
what are online ordering and payment systems?
link in with stock management systems to improve efficiency in logistics and allows for greater customisation for the customer
80
what is quality?
ability of a good or service to satisfy consumers' wants or needs
81
why is quality important?
- provide USP and give reason to buy
- allow to charge premium price = increase profit margins
- enable sales increase and market share
- reputation and brand loyalty
82
what is quality management?
the process by which a business meets customer expectations of quality
83
what is quality control?
the checking of a good or service before it is delivered to a customer
e.g. checking / inspect at the end of production
84
what are the benefits of quality control?
- avoid selling with defects = less complaints and better reputation
- only checked at end = less impact on production process
85
what are the drawbacks of quality control?
- inspection costs
- checks after
- no motivational gains that quality assurance has
86
what is quality assurance?
checking a good or service at each stage of production
87
what are the advantages of quality assurance?
- responsibility motivates
- eliminate waste = low costs
- improve overall quality
- can achieve certification = ISO9000
88
what are the drawbacks of quality assurance?
- relies on commitment of all
- training cost
- slower production
89
what is total quality management (TQM)?
where each employee at each stage of production is responsible for checking quality
90
what are the advantages of TQM?
- improve customer loyalty and satisfaction
- increase quality of end product = increase sales
- increase employee motivation
91
what are the drawbacks of TQM?
- the cost
- time to see impact
- resistance to change in workforce
92
what are the consequences of having poor quality?
- cost of reworking or replacing
- damage reputation
- legal cost?
93
what can dependability be used in?
- punctuality
- reliability
- durability
94
what is inventory?
the stock a business holds in the form of raw materials and work in progress and finished goods
95
what is flexibility?
ability to meet customer specific requirements and adapt to change
96
what is mass customisation?
the ability to tailor goods made in bulk to meet requirements of individual customers
97
what are the benefits of using mass customisation?
- increased flexibility = needs met = sales and loyalty
- closer communication and relationship
- less waste
- a stimulating work environment
98
what are the drawbacks of using mass customisation?
- requires CAM / CAD = cost
- less scope for econ of scale
- slower response
- high capacity utilisation
99
what happens with too little supply?
miss out on orders and revenue and may risk future orders due to lack of dependability
100
what happens with too much supply?
extra costs of holding the excess, potential damage of the stock becoming obsolete and business may have to sell the goods at a reduced price
101
what are ways of managing supplies?
- employ flexible workforce
- JIT- produce to order
- outsource some of manufacturing
102
what are ways of managing demand?
- increase or reduce prices
- increase or decrease capacity
- promotions
- flexible workforce
- outsource
103
what is outsourcing?
contracting an business process to an external provider
104
what are the benefits of outsourcing?
- uses specialists
- enables business to focus on its core competencies
105
what are the drawbacks of outsourcing?
- lead to loss of control
- leads to over reliance on external provider
106
what is an inventory control diagram?
graphical representation of the flow of inventory within a business. it is used by management to control and monitor the flow of inventory to meet demand
107
what is lead time?
the time it takes between placing an order and receiving delivery
108
what is re-order level?
the level of inventory which triggers an order
109
what is buffer level?
the minimum amount of stock a business wants to hold just in case of an emergency
110
what is re-order quantity?
the point at which an order for new inventory is placed. this will depend on the buffer stock level and lead time
111
what types of stock are there?
- finished goods
- work in progress
- raw material
112
what are the costs with holding stock?
- cost of storage
- interest cost
- obsolescence risk
- stock out costs
113
what is interest cost?
tying up capital in stock which the business pays interest on
114
what is obsolescence risk?
the longer inventories are held, the greater the risk that they may become unable to be sold
115
what is stock out cost?
if a business is out of inventory
- lost sales and loyalty
- cost of production and delays
- replacement order costs
116
what are the advantages of holding low levels of inventory?
- less likely to experience stock- outs
- lower risk of stock damaged or obsolete
- lower cost of holding
117
what are the advantages of holding high levels of inventory?
- better handle change in demand
- lower unit cost= bulk econ scale
118
what is a supplier?
a business who provides goods or services to another business
119
what is a supply chain?
a group of other businesses such as suppliers, wholesalers, shipping companies involved in process of getting supplies from a manufacture to the business
120
what would an effective management of the supply chain involve?
- supplier strategy
- agreeing contracts with suppliers
- whether to outsource
- deciding on how much power business wants in supply chain
121
what criteria would a business follow when choosing a supplier?
- price
- quality
- reliability
- flexibility
- capacity
- payment terms
- ethics
- location
- return policy
