Unit 4 operations Flashcards
1
Q
What are the main aspects of cell production?
A
- Production is split into teams
- Each team is responsible for a complete part
- Flexible workers
2
Q
What is the advantage of production being split into teams under a “Cell management” approach?
A
Motivation increases
3
Q
What is Lean design?
A
Lean design is when you design a product as efficiently as possible by cutting waste, saving cost, and ensuring the product delivers real value
4
Q
Pros of a JIT approach
A
- Reduces waste due to reduced inventory holding
- Increases cash flow
- Greater productivity
5
Q
What are the types of waste?
A
- Too much stock/raw materials held- Stock may be perishable
- High defects
3.Too large of a facility/outlet
6
Q
what are the types of lean production
A
- JIT
- Kaizen
- Cell production
- Lean design
7
Q
What is lean production?
A
A production strategy that reduces waste
8
Q
Advantages of adding value
A
- Products and services stand out
- Charge higher prices
9
Q
What is meant by adding value?
A
The extra value a business creates through production distributing or marketing processes
10
Q
How can we add value through production?
A
Improve products design, features or quality to gain a USP
11
Q
How can we add value through distribution?
A
Offering goods/ services in a more convenient location, time, situation
12
Q
How can we add value through marketing?
A
Creates a brand image
13
Q
Drawbacks of efficiency for labour.
A
High costs of training labour
14
Q
Drawbacks of increasing efficiency of Capital?
A
Requires available finances and may cause shareholders to resist falling dividends
15
Q
Drawbacks of efficiency for enterprise?
A
Is there demand for the higher output, if not there’s a waste increasing costs and reducing profits
16
Q
How can we use technology to increase operational efficiency in design?
A
- Use CAD to design products, increases speed of designing process, easier to change the design, increasing efficeincy
17
Q
How can technology increase operational efficiencies
A
CAD- Design
Computerised reordering levels- Stock/inventory
Automation-Capital intensive production
18
Q
How can we use technology to increase operational efficiency in stock and inventory levels
A
Computerised reordering- instant recovery when stock falls below a certain level
19
Q
How can we use technology to increase operational efficiency in capital intensive production?
A
Automation- provides constant quality, little wasteand higher output
19
Q
A
19
Q
What are the disadvantages of using technology to improve efficiency
A
Resistance from labour/ shareholders
Finances avaliable may be low
Employees being replaced
20
Q
Why might employees being replaced by capital be a cost to the business?
A
Employees do not feel secure in their job resulting in lower motivation
21
Q
What are the main operational objectives?
A
Reducing unit costs
Increasing quality
Response speed/ flexibility
Dependibility
Environmental
Create added value
21
Q
Why might a firm want to reduce unit costs
A
Lower costs= more retained profit
21
How might a firm try and lower their fixed costs?
By increasing the scale of production which results in an EOS
21
Why might a business want to produce higher quality products
Higher quality= higher consumer satisfaction= more loyalty= inelastic consumers= price increase= revenue increase=profit
22
Why might a firm prioritise response speed and flexibility?
Improves reptation- inelastic
23
Why might firms prioritise dependability
If consumers get what they want theya re more likely to become loyal
24
What is the formula for average unit cost
TC/Units sold
25
Define efficiency
Production is maximised based on given level of FOPs
26
Formula for labour productivity
Output/employees
27
Formula for capital productivity
revenue/non current assets
28
Why is efficiency important?
Maximises production from given FOPs reduces average cost per unit
29
Advantages of a lower cost per unit (CHAIN)
can lower price and increase sales
can maintain price and increase profits
30
How to improve labour efficiency
Training
31
How does training boost labour efficiency?
Increases skills, reducing mistakes and waste boosting labour productivity
32
How to improve capital efficiency?
Investment into capital and make it support labour
33
How do we improve enterprise efficeincy
Increase output to benefit from EOS
34
What is meant by outsourcing?
Paying external producers to undergo a business process for your firm
35
Advantages of outsourcing
Can use specialists
Can focus on what your business needs
36
How might using specialists be an advantage of outsourcing?
Increases quality,
reduces costs of labour,
no need for capital investment
37
Disadvantages of outsourcing
Loose control of the production process.
Can lead to reliance on the supplier
38
Why might loosing control of production processes be a disadvantage of outsourcing
Suppliers may do the bare minimum
Reputation sharing with the external firm because they join the supply chain.
39
How might being reliant on the supplier be a disadvantage of outsourcing?
Suppliers have more power
they may increase their prices
increasing costs of production for firms
40
How can we increase supply?
Hire temporary workers
Purchase to order
Outsourcing
41
How does hiring temporary labour increase supply ability?
Temp employees are cheaper as they are always being utilised when demand is present
42
How does a purchase-to-order approach increase supply ability?
Production only starts when order is placed, decreasing storage costs
43
What is mass customisation?
Mass customisation is the usage of CAM to produce individually tailored output on a large scale
44
Pros of mass customisation
Stimulates work environment
Increased operational flexibility
45
How is increased operational flexibility an advantage of mass customisation?
Can better meet consumer needs
Increasing sales and revenue
46
How does increased operational flexibility appear as an advantage of mass customisation in the long term?
Increases repeat businesses
Increases brand loyalty
Increases added value
47
How is a stimulated work environment an advantage of mass customisation?
More to do/ less boring increasing motivaton
48
What is a buffer stock
The buffer stocck level is the minimum stock a business intends to hold
49
Pros of having a buffer stock
Manages uncertainty
Negociate a better deal with suppliers
50
How is managing uncertainty an addvantage of having a buffer stock?
when there unexpected changes in demand or if suppliers fail to deliver firm can still produce output
51
How is being able to negociate beter deals an advantage of having a buffer stock
Increases in order sizes- purchasing EOS lowers average cost per unit
52
Disadvantages of having a buffer stock level
High stock holding costs
Wastage
53
Why is a higher stock holding cost a disadvantage of having a buffer stock?
High storage costs, reduces cashflow
54
How is wastage a disadvantage of having a buffer stock
Stock may go out of date/fasion
Stock may perish
55
Cons of JIT on cost
1. Higher average cost per unit as there are many small purchases
56
Cons of JIT
1. higher average cost per unit
2. Reliant on suppliers
3. Risk of inability to meet unexpected demand
57
How is being reliant on supplier a disadvantage of JIT
If suppliers fail to deliver products on time, there are no sales being made
58
How is failing to meet unexpected demand a risk of JIT
Loss of sales
Reduces reputation
59
What should be considered when a supplier is chosen
1. How reliable are they
2. How predictable sales are
60
What is capital intensive production
Capital intensve production occurs when there is proportionally more capital used in production processes vs other FOPs
61
Pros of capital intensive production
Automation
efficeincy increase
62
What is the advantage of having a fully automated production process
operates 24/7 need no breaks
63
Disadvantages of capital intensive production
High initial cost
machines are not flexible
64
How may a high initial cost of capital intensive production be disadvantageous
Businesses may not be able to afford it/ shareholders may loose out on dividends
65
When should a business be capital intensive?
When it has high levels of avaliable finance
When it operates in a country that has high labour costs
when standardised products are being made
66
What is labour intensive production?
Labour intensive production is where there is proportionally more labour used in a production process than any other FOP
67
Advantages of a labour intensive production process
Labour can do stuff that capital cant- produce variety of products
Labour can support kaizen
68
Disadvantages of labour intensive production
Labour need breaks- cost
Takes time to recruit and train labour- cost
69
When should we favour a labour intensive production process?
Low finances
When the firm operates in countries with low labour costs
When products are not standardised
70
What is meant by the term capacity?
The maximum amount of goods/services a business can produce, deliver, handle within a given time period
71
Pros of increasing capacity
Enables businesses to meet consumers demand
Maximise revenues
72
What happens if a firm fails to meet consumer demand?
Sales lost, consumers turn to rivals
73
What are the cons of increasing capacity
may lead to higher costs
74
Why does increasing capacity lead to higher costs
Hire more labour
buy more storage
75
What should be considered before capacity is increased?
Will extra revenues cover capacity costs
Do shareholders agree
Can you finance it
76
What is meant by capacity utilisation?
The % of maximum output that is being used in a given time period
77
Capacity utilisation formula
Actual output/maximum output
78
Advantages of high capacity utilisation
Higher efficiency
lower unit prices
79
Why is capacity utilisation important for firms with high fixed costs?
Needs high output to keep costs low
80
how might an increase in capacity utilisation affect unit costs and how
Lowers unit costs- firms can reduce prices and raise demand
81
advantages of low capacity utilisation
Spare capacity allows for operational flexibility
increases quality of production
82
How might spare capacity allow for operational flexibility
increased ability to cope with unexpected demand
83
How might low capacity utilisation result in better quality production
Products are not rushed, space to upkeep QA or QC processes
84
how might a business reduce capacity
redundancies, selling assets
85
What is QA
Quality assurance is when firms build up quality at every step of production
86
what is QA done with
QC
87
Pros of QA
Reduces defects
Improves motivation- staff are involved
88
COns of QA
May slow down production processes
Labour may resist
89
What is the disadvantage of slowing the production process?
reduced productivity= lower output= higher costs
90
What is TQM
When all employees are continuously improving processes and products to meet consumer expectations
91
Pros of TQM
improves quality of final product
Increases employee motivation- feel like they make a difference
92
Cons of TQM
Expensive to introduce
Takes time to introduce
May lead to resistance
93
What is meant by a supply chain?
The sequence of processes needed for the production/distribution of a good/service to the consumer
94
What might a firm consider when choosing a supplier
Price
Quality
Speed
Predictability
95
What is meant by QC
Quality control is a system to ensure a final good/service meets a certain level of quantity
96
When does a QC approach identify defects
before they are given to consumers
97
What is a result of poor quality (CHAIN)
More defects, more waste, higher costs of production, increases final price, reduces competitiveness
98
Pros os QC
Avoids selling products with defects
Checks are made after product is made
99
What is a benefit of checking products after they are produced?
Production process isnt slowed down
100
What are the cons of QC
Checks after production dont reduce waste
No motivation benefit of QA- employees are NOT responsible
101
Benefits of quality
Differenciated producta
Can charge higher prices
102
Why might a firm be able to charge higher prices of high quality products?
Consumers are willing to pay high prices for high quality products
increasing brand loyalty
inelastic demand
high prices can be charged
103
Impacts of poor quality
Damage reputation
A reduction in sales will cause poor finances due to waste
104
What are the cons of mass customisation?
Requires CAM- Increases IT cost
Less able to get EOS
105
Capacity utilisation formula
Actual output/ maimum output x100
