Business > Unit 2 - Operations Management > Flashcards

Unit 2 - Operations Management Flashcards

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1
Q

What is Added Value?

A

The difference between selling price of a product and the cost of the raw materials used to produce it. (selling price - total cost of raw materials)

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2
Q

What are some ways of increasing value added?

A

. Purchase cheaper raw materials (quality/EoS?)
. Improve efficiency of production (EoS)
. Raise price of product (PED?)
. Brand status
. Improve customer saccess/convenience

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3
Q

What are the 3 types of methods of production?

A

. Job production
. Batch production
. Flow/Mass production

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4
Q

What is job production, its advantages and disadvantages?

A

Where a single product is made to meet a specific customer’s requirement, often using skilled labour.
Adv: customised products, high quality, greater job satisfaction, strong reputation
Disadv: long time to make, higher prices, difficult to achieve EoS
e.g. tailored suits/wedding dresses

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5
Q

What is batch production, its advantages and disadvantages?

A

Where a group (batch) of similar items is made together at one time.
Adv: EoS, flexibility, efficient use of machinery compared to job production, easier to control quality per batch
Disadv: storage costs for larger batches, less personalisation compared to job production, mistakes can effect whole batches
e.g. clothing (size/colours), bakery

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6
Q

What is flow production, its advantages and disadvantages?

A

Where items move continuously through the production process - identical products to be made in large volumes.
Adv: high output (meet demand), low unit costs (EoS), efficient use of labour and machinery
Disadv: high initial setup costs (machinery), repetitive work leads to low motivation, inflexible

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7
Q

What is productivity?

A

Productivity is a measurement of the efficiency with which a business turns production into output.

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8
Q

What is the formulae for labour and capital productivity?

A

Labour productivity = output/number of employees
Capital productivity = output/capital employed

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9
Q

What are some reasons for why labour productivity is important?

A

. Labour costs are usually a significant part of total costs
. Business efficiency and profitability are closely linked to productive use of labour
. Competitiveness

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10
Q

What are some factors influencing labour productivity?

A

. Quality of fixed assets
. Skills, ability and motivation of workforce
. Methods of production organisation
. External factors e.g. supply chain reliability

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11
Q

What are some ways to improve labour productivity?

A

. Measure performance and set targets
. Streamline production process
. Lean production
. Invest in capital equipment
. Employee training

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12
Q

What are some of the potential issues of improving labour productivity?

A

. Trade-off with quality
. Employee resistance + demand higher pay for improved productivity - negates impact on decreasing unit costs

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13
Q

What is capacity utilisation and its formula?

A

The percentage of a firm’s total possible output that is actually being used.
Actual output/maximum possible output x 100

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14
Q

What are the advantages and disadvantages of working at full capacity?

A

Adv: maximises efficiency - all resources are full used, lower unit costs (EoS), higher output and sales revenue potential, improved competitiveness
Disadv: unexpected issues results in delays, quality may suffer, increased pressure on machinery and employees

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15
Q

What are the advantages and disadvantages of working below full capacity (capacity underutlisation)?

A

Adv: flexibility (take on unexpected orders), easier maintenance, less pressure on staff, investment in other areas e.g. training staff
Disadv: Higher unit costs, lower profitability - limits capital investment and R&D - reduces long-term competitiveness, wasted resources

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16
Q

What are the 3 solutions of resolving problems of capacity underutlisation?

A

. Subcontracting of production
. Rationalisation
. Increasing use of assets

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17
Q

What is subcontracting of production, its advantages and disadvantages?

A

When a business hires another firm to carry out part or all of its production process instead of doing it internally
Adv: reduces risk as capital investment is reduced, lower costs, access to specialist skills and equipment, frees up capacity within the business
Disadv: lack of control (quality), delays (customer satisfaction), reliance on external suppliers

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18
Q

What is rationalisation, its advantages and disadvantages?

A

Process of reorganising the business so that it focuses on core products and disposing those which are not profitable
Adv: lower costs through reduced waste, labour and overheads, improved efficiency and productivity, competitiveness
Disadv: risk of customers being lost, redundancy costs, short-term disruption to production processes

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19
Q

What is “increasing the use of assets”, its advantages and disadvantages?

A

When a business aims to make better use of its resources - “Making assets sweat”
Adv: Higher efficiency, lower unit costs as fixed costs are spread over more production
Disadv: lack of flexibility, possible fall in quantity, pressure on staff, more breakdown and machine failures

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20
Q

What are the 5 different technologies used in production?

A

. CAD
. CAM
. IT
. Robotics
. Computer Modelling

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21
Q

What is CAD, its advantages and disadvantages?

A

CAD ( Computer Aided Design) is a computer program which allows designing new products or altering existing products
Adv: quick design process ( lowers costs), increased efficiency, relatively cheap, increases competitiveness
Disadv: skills required to use CAD, may be high initial costs of software, hardware and training, technical issues - lost data, may reduce creativity

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22
Q

What is CAM, its advantages and disadvantages?

A

The use of computer-controlled machinery and software to automate and manage the manufacturing process.
Adv: faster production process, improved productivity, increased precision and consistency, minimal waste, improved quality and flexibility in production
Disadv: high initial and maintenance costs, increased wages for machine specialists, job losses

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23
Q

What is IT, its advantages and disadvantages?

A

The use of computers and digital systems to store, process and communicate information within a business
Adv: improved communication, greater efficiency and productivity, enhanced record-keeping, flexible working
Disadv: high set up and maintenance costs, risk of data breaches, system failures can disrupt operations

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24
Q

What is Robotics, its advantages and disadvantages?

A

The use of programmable machines (robots) to perform tasks in the production process.
Adv: precision and consistency, increased productivity, lower long-term labour costs
Disadv: High initial investment and maintenance costs, job losses, lack of flexibility, dependence on technology

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25
What is computer modelling, its advantages and disadvantages?
The use of computer software to stimulate real-life situations, processes or systems to test ideas and predict outcomes before they are implemented Adv: perfect products and improve efficiency of production, develop "what if" scenarios - reduces risk, flexible Disadv: High setup costs and maintenance, requires skilled staff, models are only as good as the data used
26
What is lean production?
It is a a management approach which focuses on cutting out waste, whilst ensuring quality products - this method aims to remove all elements of waste from the production process and as a result, increase productivity and reduce costs
27
What are some examples of waste?
. Overproduction - excess stock . Wasting time (work in progress sitting idle) . Defects . Unused raw materials . Skills/knowledge of workers not being used by management
28
What are the 5 methods of lean production?
. Time-based management . Simultaneous engineering . Just-in-time production (JIT) . Cell production Kaizen
29
What are some things which effective lean production require?
. Good relations with suppliers . Committed, skilled and motivated workers . Quality assurance . Continuous improvement (Kaizen) . Trust between management and employees
30
What is time-based management, its advantages and disadvantages?
It is a general approach that recognises the importance of time and seeks to reduce the level of wasted time in the production processes of a business. This method requires flexible production methods and trained employees. Adv: faster response to market changes and customer demands, reduced waste and lower costs, improved productivity, teamwork and employee involvement Disadv: requires a flexible and skilled workforce, pressure on employees during tight deadlines, quality may suffer
31
What is simultaneous engineering, its advantages and disadvantages?
It is an approach to project management that helps firms develop and launch new products more quickly - all parts of the project are planned together - design, production and marketing all work together simultaneously rather than in series. Adv: reduces wasted time, encourages teamwork/communication, higher quality Disadv: requires strong coordination and understanding between departments, potential conflict, requires good project leadership
32
What is just-in-time production, its advantages and disadvantages?
A process which aims to ensure that inputs only arrive when they are needed. Customer orders determine what/how much is required to produce Adv: lower stock holding costs - less money tied up in inventory - improved cash flow, encourages efficiency and quality control, spare capacity Disadv: High reliance on suppliers, little room for errors, unexpected orders - loses out on profit, requires a complex, specialist stock system
33
What is cell production, its advantages and disadvantages?
It is a form of team working where production processes are split into cells. Each cell is responsible for a complete unit of work Adv: improves teamwork and communication, workers become multi-skilled and more adaptable to the business' needs, greater employee motivation Disadv: conflict
34
What is Kaizen, its advantages and disadvantages?
Kaizen is creating small, positive changes to eventually reap major improvements - it's an attitude based on cooperation and commitment instead of radical changes. Adv: encourages employee involvement, improves efficiency and reduces waste overtime, low-cost improvements, enhanced quality gradually Disadv: requires full commitment from employees and management, benefits take time ( time lag), employee resistance?
35
What does quality mean?
Quality refers to the features of a product/service that allows it to satisfy customers' wants - "fitness for purpose"
36
What are the factors which define quality?
. Performance (fit for purpose) . Appearance . Availability + delivery . Reliability/Durability . Price/Value for money
37
What are the advantages and disadvantages of upholding quality?
Adv: improved customer satisfaction and customer loyalty (repeat purchases), enhanced brand reputation, reduced waste and costs, higher sales and market share - perceived value, charge high prices (depends on PED), differentiate itself from competition Disadv: higher production costs, time-consuming to monitor quality, initial investment for quality systems
38
What are some factors which the five functions of a business must consider when it comes to upholding quality?
. Purchasing - ensuring the right quantity of raw materials . Operations - structuring manufacturing process . Finance - ensuring capital for appropriate investment. . HR - ensuring factor of production of labour . Marketing - providing market research information to satisfy customer wants
39
What is Quality Assurance?
Any systematic process of determining whether a product/service meets specified requirements - it is a way of preventing the production of poor-quality products, as opposed to checking quality at the end of the production line
40
What are the five different methods used for quality assurance?
. Recognised standards . Bench marking . Product design checking . Production control . Team working
41
What are recognised standards, its advantages and disadvantages?
It is official, externally set benchmarks that a business meets to show its products' quality - it is an indication of achievement and maintenance of quality Adv: improves reputation and customer confidence, provided competitive advantage ,encourages consistent quality Disadv: high cost and time commitment, increased bureaucracy, may reduce flexibility
42
What is benchmarking, its advantages and disadvantages?
It is the process of setting standards of quality and output which are based on the best that competitors can offer. Adv: encourages continuous improvement, identifies performance gaps, can acts as a motivator for the workforce Disadv: time-consuming and costly, access to information may be limited, continuous updates needed especially within dynamic environments
43
What is product design checking, its advantages and disadvantages?
The process of reviewing a product's design before production to meet standards. Adv: identifies flaws earlier on, ensures customer satisfaction, supports quality and brand assurance Disadv: time-consuming, costly (through further testing?), delays product launch
44
What is production control, its advantages and disadvantages?
It is a method of ensuring that standards set and processes designed to meet these targets are actually being used in the workplace Adv: reduces waste and downtime, ensures consistent quality, helps meet deadlines Disadv: complex and time-consuming to manage effectively, requires accurate data and constant monitoring, may increase administrative costs
45
What is teamworking, its advantages and disadvantages?
Teamworking is an approach where employees work together in groups to achieve common goals and share ideas. Adv: improved motivation through shared responsibility, encourages creativity and problem-solving, enhances communication and problem solving Disadv: potential conflict, decision-making may be slower, unequal participation, requires training and good leadership
46
What is quality control?
It is the process of inspecting products to ensure that they meet the required quality standards.
47
What are the two main ways of carrying out quality control?
. Inspection (take defects out) . Quality assurance (process which builds quality in - pre-inspection)
48
What are the three main points in operations when inspection is used in quality control?
. When raw materials are received prior to entering production . Whilst products are going through the production process . When products are finished - before dispatched to customers
49
What are the advantages and disadvantages of quality control?
Adv: data collected from sample is used to make judgements on action to be taken, sub-standard output is spotted before it reaches to the customer, minimises further disruption to production, applies a consistent standard to quality Disadv: costly, could be "too late", inconsistent inspections, done by inspectors (externally) - lack of feedback?
50
What is the pivotal difference between quality control and quality assurance?
QC - detects problems after they occur QA - prevents problems before they occur
51
What is Total Quality Management?
The process which aims to eliminate errors in the production process - "zero defects" - it is a OM system that creates structures within an organisation which satisfies internal and external stakeholders. Creates quality through continuous improvement, development of systems and products, creating an organisational culture of quality. Requires total integration of staff, customers, suppliers and other stakeholders.
52
What are some of the production management and control methods may be required to TQM to be effective?
. Quality chains . Empowerment - giving workers control over tasks . Teamwork . Monitoring . Quality circles . Zero defects . Benchmarking
53
What are some of the advantages and disadvantages of using TQM?
Adv: improved efficiency via reducing defects - better allocation of resources, enhances customer satisfaction, strengthens brand reputation Disadv: initial costs of implementing TQM, staff resistance - command more pay, managers may not feel confident, quality may not be critical to the firm, requires strong commitment, time lag
54
What does it mean by purchasing?
The process of obtaining raw materials, components and other supplies to produce goods/services - it involves choosing the right suppliers, negotiating and ensuring timely delivery.
55
What does it mean by stock control?
The process of managing the levels of raw materials, work-in-progress and finished goods to ensure production runs smoothly without holding excess stock. . Businesses must ensure availability of stock . Ensure that part-finished goods don't sit around the factory - brought to the next stage ASAP . Finished goods are available for delivery for customers
56
What are the methods of stock management?
. Buffer stock (traditional method) . Reorder level system . Computerised stock control . JIT
57
What does it mean by buffer stock and what are its advantages and disadvantages?
Buffer stock includes keeping a minimum safety stock to protect against unexpected demand/delays - held "just-in-case". Adv: prevents shortages, keeps production running, maintains customer satisfaction Disadv: Increases shortage costs, risks of waste/obsolescence
58
What is the reorder level system?
New stock which is ordered automatically when stock hits a minimum level i.e. buffer stock.
59
What is meant by "lead time"?
Lead time is the time which suppliers take between placing a delivery and it actually arriving.
60
What is meant by "reorder quantity"?
The amount of quantity of stock that is ordered each time from suppliers (difference between buffer stock and maximum stock)
61
What is computerised stock, its advantages and disadvantages?
The use of digital systems to track stock automatically. Adv: accurate and real-time data, reduces human error, increased efficiency Disadv: expensive to set up and maintain, requires staff training, vulnerable to system failure
62
What is JIT, its advantages and disadvantages?
Stock is only delivered when it is needed in production Adv: minimises storage costs, improves cash flow, reduces waste Disadv: very reliant on suppliers, risk of production halts if delivery is delayed, frequent deliveries increase costs
63
What is Research and Development (R&D)?
R&D involves identifying new ideas and turning them into products, services and processes. It is essential for businesses to compete in a dynamic market place. Helps with innovation (finding a new way of doing something)
64
What are the advantages and disadvantages of R&D?
Adv: increased market share (differentiation), first mover advantage, USP, brand reputation, high added value, premium pricing Disadv: time consuming, resource intensive, no guarantee of success, potential damage to brand image/reputation
65
What are the two types of innovation and their definitions?
. Product innovation - launching new/improved products/services . Process innovation - finding better/more efficient ways of producing existing products, or delivering existing services
66
What are the advantages and disadvantages of product innovation?
Adv: first mover advantage, great perceived added value, premium pricing, early customer loyalty, enhanced reputation Disadv: high R&D costs, risk of failure, can be copied by rivals
67
What are the advantages and disadvantages of process innovation?
Adv: reduced costs - increased efficiency, increased quality, greater flexibility of operations Disadv: high investment costs, training required, possible disruption when implementing, job losses?
68
What are the steps within the R&D process?
. Identification of problem . Research . Development of ideas/solutions . Development of prototypes . Final design . Testing . Manufacturing and launch
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