Unit 8: Production (operation management) Flashcards Preview

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Flashcards in Unit 8: Production (operation management) Deck (25)
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1
Q

What are the inputs and outputs of the production processes?

A

Inputs: Information, Capital, Labour, Materials, Energy
Outputs: Goods and Services, Waste

2
Q

What is production and what is productivity?

A

Production means making goods and services.

Productivity means how effective are the resources used for the production.

3
Q

How to calculate productivity?

A

Productivity = Quantity of output/quantity of inputs

E.g. Labour productivity = 500 cars per hour/ 1000 employees = 0.5 cars per hour per employee

4
Q

What are the ways to improve productivity?

A
  • Organising work more efficiently (e.g. layout of the machinery)
  • Using more productive resources (e.g. using modern machinery and equipment, more employee training)
  • Automation: Use machinery instead of workers
  • Improve staff’s motivation
5
Q

What are the three ways of methods of production?

A

Job production
Batch production
Flow production

6
Q

Explain the job production and give an example

A

Job production: Items are produced individually to meet the requirements of a specific customer. Products take slow to make and are very expensive - but are of very high quality. E.g. Tailors that make suits.

7
Q

Explain the batch production and give an example

A

Batch production: A number of identical or similar items are produced in a set or batch. Batch production involves highly planned stages of work. Some standardisation of products. Sometimes they stop the production process and change over to a similar one. E.g. A batch of bread rolls.

8
Q

Explain the flow production and give an example

A

Flow production: The products or services pass down a line of production. The process is repeating with identical products. E.g. Production of bottles of Coca-Cola

9
Q

Define economies of scale

A

Economies of scale occur when mass producing well results in lower unit cost. Total cost/ Quantity made = Unit cost

10
Q

What are the 5 internal economies of scale?

A

1) Technical economies: Machinery (Large firms use expensive machinery that is effective and lasts longer)
2) Managerial economies: Can employ specialist staff e.g. accountants, researchers…
3) Financial economies: Cheaper to borrow money.
4) Risk bearing economies: Large firms spread risks over their DIVERSITY of products.
5) Commercial economies: Buying in large quantities - more discount.

11
Q

What are diseconomies of scale and why do they occur?

A

Diseconomies of scale is when the unit cost begins to rise. It occurs due to ineffective communication, reduced motivation or bad management.

12
Q

What are the external economies of scale?

A

A local skilled labour force is available
An area has good transport network
An area has a good reputation for producing a certain good

13
Q

Define Lean production

A

Lean production means doing more with less. A lean company will make best use of resources by cutting out wastes

14
Q

What are the 3 steps to achieve lean production? Explain.

A

1) Keeping work areas tidy and organised: Time is not wasted on finding things.
2) Just in time (JIT): Goods must be produced and delivered just in time into finished goods, are prepared just in time.
3) Kaizen: Continuous improvement. Everybody in the company is given a responsibility of identifying and suggesting ways of improving production.

15
Q

Define Quality

A

Producing a product /service or process that the customer expects.

16
Q

What is the importance of quality?

A

Quality is one of the key decisions in operation in today’s highly competitive world.
Quality increases profits, decreases costs and improves customer’s satisfaction.

17
Q

Main features of quality control

A

Finished products are checked by inspectors to see if they meet the set standard.
Inspectors cut out substandard products => Wasteful

18
Q

Main features of quality assurance

A

Focused on the development stage of the production
Seeks to stop faults happening in the first place => Aims so that the products are produced to the required standard.
Responsibility of the work force, rather than the inspectors. Less waste.

19
Q

Main features of the Total Quality Management (TQM)

A

Managers try to bring out the attitude of thinking about quality in every stage of production.
Whole business understand the need for quality and seeks to achieve it.
Involves creating quality circles - workers/employees meet and discuss to improve quality. (Kaizen)

20
Q

The importance of cost

A

It business, it is essential to keep costs as low as possible. Businesses with lower costs have an advantage over rivals.

21
Q

What are the two types of costs and explain them.

A

Fixed costs: Do not increase when the output varies - for example: rent, heating bills, salaries. (indirect costs/overheads) (Drawn as a straight line)
Variable costs: Increases as output increases - for example: materials. (direct costs) (Drawn as a diagonal line)

22
Q

What is a break even point? How to find a break even point?

A

It’s when there is no loss and no profit.
When Total Sales (Prize x Quantity)= Total cost

Fixed cost/(Unit Selling prize - variable unit cost) = Break even

23
Q

Break even charts

A

Learn the break even chart: Total Revenue line, Total cost line, What the axis represent, Margin of safety.

24
Q

Limitations of the break - even chart

A

A break even chart is only a rough guide. Variable costs can change quickly for example is the price of labour or raw materials rise.

25
Q

Factors needed to consider when choosing a location for production

A
Distance to markets
Availability to raw materials
Transport costs
Availability of land
Availability of labour
Safety
Utilities
Communications