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Flashcards in Unit 4 - Operations Deck (28):

What acronym is used for what good objectives should be?



What is labour productivity?

The amount of output per employee


How is labour productivity calculated?

Total output/number of employees


What are the 4 main areas for operational objectives?

Labour productivity, capacity, capacity utilisation and unit costs


What is capacity utilisation?

This measures what percentage of the maximum possible capacity is being used


How do you calculate capacity utilisation?

Actual output/max possible output X100


Why might it be difficult for some firms to accurately calculate unit costs?

They may sell a number of different products.


What is the best capacity utilisation for a firm to have?

Around 90%, close to 100% but leaving enough spare capacity in case of problems and for flexibility


How can a business increase efficiency?

Increase labour productivity
Invest in tech
Job redesign


Why might it be hard to increase efficiency?

Employers may resist without pay rises
There may be costs of improving efficiency


What is lean production?

It is about getting more from less and minimising waste


What is just-in-time production?

Where materials are received just as they are needed for production


What is time-based management?

It aims to reduce time wasted in operations, such as shorter lead times


What is TQM?

An idea of quality assurance where all workers have responsibility for getting it right for time


Why is TQM more effective for a business than quality check teams like with Henry Ford?

It reduces costs by cutting out problems and stopping products having to go back to the beginning of the production line


What is Kaizen?

This is the idea of individual workers making small changes on a regular basis


What is quality assurance?

Making sure quality needs are met


Name 3 benefits of improving quality

-more (potentially) brand loyalty
-less costs from having to dive things again
-a USP


Name 3 consequences of poor quality

-loss of reputation
- increased costa from having to do things again
-potential problems with laws and regulations depending on product being sold


For which kind of firms might quality and quality improvement be the most important objective?

-firms selling luxury goods
-firms in competitive markets -USP


Name 3 influences on the amount of inventory held

-the nature of the product
-nature of demand, e.g. Seasonal?
-opportunity cost of holding stock


What is buffer inventory?

The minimum amount of stock a business wants to hold


What is the reorder level?

The level of stock at which a new order is placed. This will depend on lead times.


What does 'lead time' mean?

The time it takes between an order being placed and the stock being delivered


What might a business consider when choosing their suppliers?

-location of supplier (could mean different costs and led times)
-capacity of supplier and their potential to match potentially higher future demand from the business
-their reliability
-their flexibility
-the ethics of the suppliers as it could have an effect on the business purchasing from them


What is outsourcing?

Paying another firm to part of your firms' work for you


What are the advantages of outsourcing?

-cuts costs potentially (means you don't have to expand and buy new equipment)
-firm may be specialist
-may enable quicker responses from the firm if they have good relations with the firm they have outsourced to. This is also because the business is not trying to do everything itself.


What are the drawbacks of outsourcing?

-may cost a lot
-may be issues with quality
-if there are any problems with the work done by the firm it could impact on the reputation of the business.