Operations

Question 1

What are the operational objectives

Answer 1

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Cost, Added value, Quality, Flexibility, Speed of Response, Environment, Dependability

Question 2

how to calculate average unit costs

Answer 2

total costs/total output

Question 3

why is cost objective important

Answer 3

if lower unit costs, can offer lower prices therefore make higher profit margin - more competitive

Question 4

what are methods of cost cutting

Answer 4

restructuring/delayering - remove layers of hierarchy
switch supplier - change to cheaper sources but must consider how important quality is
minimise waste - more use of tech to reduce errors, stop production of unprofitable goods

Question 5

why is quality objective important

Answer 5

-if operating in a mass/competitive market, best to have high quality to have good reputation
-if have bad quality could cause a worsened reputation which may affect revenue

Question 6

how to measure quality

Answer 6

-scrap/defect rate
-reliability
-customer satisfaction
-number of customer complaints
-customer loyalty
-% of on-time delivery
-check if products are consistent

Question 7

why is flexibility objective important

Answer 7

-customers value it so can be used as a USP
-its about how effective assets are being utilised/how responsive the business is to unexpected changes in demand

Question 8

how to measure flexibility

Answer 8

-labour productivity
-output per time period
-capacity utilisation

Question 9

what are methods of improving flexibility

Answer 9

-zero hr contracts e.g. only add extra staff when needed (BUT lack of job security may cause negative response)
-lean production e.g. just in time system where production only happens when orders come in
-multiskilling e.g. train staff to do multiple tasks which can minimise disruption and staff will be more responsive to customer needs

Question 10

why is environmental objectives important

Answer 10

-must follow legislation which can increase costs and also prices for customers, can lead to lower satisfaction
-ethically conscious customers may base their decisions to buy from the business on how serious they take the environment

Question 11

how to measure environment objective

Answer 11

-rate of energy efficiency
-proportion of recycled material
-compliance with waste disposal regulations
-% of supplies from sustainable sources

Question 12

why is speed of response objective important

Answer 12

-better speed=better value so can charge higher price
-can be a USP and make the business more competitive
-BUT must make sure speed of response doesnt decrease quality if the business values high quality

Question 13

internal influences on operational objectives

Answer 13

-corporate objectives e.g. cant conflict
-finance e.g. ops can involve high investment so depends on financial objectives/positioning
-HR e.g. quality/capacity of workforce affects
-Marketing e.g. nature of product and regular changes to the marketing mix could strain objectives

Question 14

external influences on operational objectives

Answer 14

-economy e.g. sudden/long term changes in demand impacts cap U, market continuously changes so must change ops too, interest rate changes which can impact cost of financing capital investment
-competitor efficiency e.g. if they quicker and efficient then pressure on ops to be comparable