UNIT 4 OPERATIONS - INCREASING EFFICIENCY AND PRODUCTIVITY Flashcards
INCREASINg opperational efficiency is all about
getting mroe ouptu from a given level of resources
if operatioal efficiency can be achieved what happens to unit costs
they fall
and you know the drill
uni costs declines as a capacity utilisation icnreases
t/f
true
as unit costs decrease when capacity utilisation increases its important a bs dont have too much
excess capapcity
what is excess capacity
when actual production falls below max production
if we have excess capcity resources arent being used
efficiently
operating at amx apapcity creates it sown problems why
3 points
reduces flexibility int erms of new orders
puts undue pressure o workers
put undue presure on machinery if proper maintainenace cant be undertaken
what is an optimal level of capacity
close to 100% as posssible while leaving sufficient spare capacity to cope with new orders
optimal elvel of acpapcity in agrowing market needs to be planned
carefully
when making a judgement/eval a bs capapcity utilisation what is importnat
compare with capcit utilisation in previous years
industry avergae
increasing capacity utilisaiotn is better but not
always
sum up beneffits of high capacity utilisation
3 points
more efificney
important for high fixe costs
reduces inot costs
explain +ve of capcity utilisatio in terms of more efficieny
more efificnet
as more resources used
therefore less waste
this is beenficial for saving osts
make consumers happy as less being wasted
and lowers unit costs
why is high capcity utilisation important for a busines with high fixed csots
they need to increase ouptut to keep unit costs lower q
why is hihg capacity utilisation important in terms of beenfits of lo unit costs
as a result of being more efificent we get lower unit costs
we can decrease prices
and increase demand for goods in a comp mkt - if price elastic
as lower price - more rev
sum up negatoves of hihg cpacity utilisation
4
undue stress on workers and machines - lead to demotivated/ less well run machines
people may be doing things way to quick
miantiannng machines/equipmtn is hard
increase sproblems if deamnd spikes high
in terms of -ve og high capacity utilisiation why is pepole/mahcines doing thigns to quick bad
can reduce quality
in long term can create -ve rep , decreae brand loyalty and increase elastiicty
why from hihg cap utilisation do we get problems if deamnd spieks
since already nealry at max - may not be able to fulfill
result in missed opportunity and bs seen as unrealiable (Fail to meet op obj
-ve of low cap utilisation
less resources used
affects other departments
run risk of not being ablr to meet deamdn wehn high
whats the problem of less resources being used int erms of capacity utilisation
if less are used this reduces our efficiency
and increases our overall avg unit costs
which can lead to us increasing prices and being less comp as a result
eval depends on elasticity
how can low cap u affect mkting for a hotel
low cap dont lok good for marketing and rep
cuz when customers come think why no one else here
how can low cap u affect hr for a dpt
they can be demotivated as theres not lots to do
little drive to over achieve
why does low cap u run the risk of not being able to meet demand when high
wf may not be used to this high level
they may not be able to perform under pressure
so bs cant meet demadn
missed opportunity
run risk of being unrelaiabl
what are +Ve of capacity utilisatoin
time available to do necessarty aminatianeance of machines
spare capapcity
possibly improve quality
