Unit 4: Operations

Question 1

Efficiency

Answer 1

ability to accomplish something with the least waste

Question 2

Effectiveness

Answer 2

how successful something is in producing a result

Question 3

4 ways to improve efficiency/productivity

Answer 3

+ Labor skills
+ Motivation
+ Automation
+ Reduce waste

Question 4

Labor Intensive

Answer 4

Ads:
+ Unique & customized products
+ Cheaper
Disads:
+ Training
+ Lower productivity
+ Quality not assured

Question 5

Capital Intensive

Answer 5

Ads:
+ Consistency
+ Work continuously
+ Can do boring & repetitive tasks
Disads:
+ High initial costs
+ Maintenance costs time & money

Question 6

Job Production

Answer 6

Ads:
+ Product meets requirements exactly
+ Interesting work ⇒ higher morale & motivation
+ Can charge higher
Disads:
+ Expensive labor
+ Lengthy production time
+ Expensive errors

Question 7

Batch production

Answer 7

Ads:
+ More variety
+ Interesting work
+ Flexible production
Disads:
+ Machinery costs
+ Inventory & material costs for multiple products

Question 8

Flow production

Answer 8

Ads:
+ Economies of scale
+ Quick production process
+ Automated process runs 24/7
Disads:
+ Inventory costs high
+ High initial cost to set up flow line
+ One machine breaks ⇒ production halted

Question 9

Economies of scale

Answer 9

+ Purchasing
+ Financial
+ Marketing
+ Managerial
+ Technical

Question 10

Diseconomies of scale

Answer 10

+ Poor communication
+ Low morale
+ Slow decision making

Question 11

How to avoid diseconomies of scale

Answer 11

+ Decentralization: delegate decision making
+ Improve coordination
+ Reduce diversification: focus on what they do best

Question 12

Just-In-Case

Answer 12

Ads:
+ Avoid missing sale when there’s sudden change in demand
+ Order inventory in bulk ⇒ economies of scale ⇒ lower average cost
Disads:
+ Storage costs
+ Wasting materials if they’re not used in time
+ Opportunity cost

Question 13

Just-In-Time

Answer 13

Ads:
+ Reduces inventory costs
+ Low warehouse space
+ Good cash-flow as goods sold quickly
Disads:
+ Heavily relies on suppliers
+ Delivery costs

Question 14

Outsourcing

Answer 14

Ads:
+ Reduce operational costs
+ Focus on core business activities
+ Access to quality services/resources unavailable within business
Disads:
+ Lose control
+ Lose jobs
+ Quality issues

Question 15

Capacity Shortage

Answer 15

+ More resources
+ Outsource

Question 16

Capacity Excess

Answer 16

Short-term:
+ Stock extra products
+ Introduce flexibility
+ Marketing solutions
Long-term:
+ Rationalize: closing down factories/offices ⇒ redundant employees
+ Create new products
+ Marketing solutions