Unit 4. Chapter 21. Operations planning

Question 1

Operations planning

Answer 1

preparing input resources to supply products to meet expected demand

Question 2

Importance of operations planning

Answer 2

If sales forecasts are reasonably accurate, then operations managers able to:

• match output closely to the demand level
• keep stock levels to a minimum efficient level
• reduce wastage of production. e.g. by perishable products being rejected due to being too old
• employ and keep busy a stable, appropriate number of staff
• produce the right product mix.

Question 3

operational flexibility

Answer 3

the ability of a business to vary both the level of production and the range of products following changes in customer demand

Question 4

Operational flexibility can be achieved:

Answer 4

• increase capacity by extending buildings and buying more equipment - expensive
• hold high stocks - these can be damaged and opportunity cost
• flexible and adaptable labour force - using temporary, part-time contracts reduces fixed salary costs but reduce worker motivation
• flexible flow-line production equipment

Question 5

Process innovation

Answer 5

the use of a new or much improved production method or service delivery method

Question 6

Job production

Answer 6

producing a one-off item specially designed for the
- labour-intensive
- enables specialised products to be produced
- tends to be motivating for workers
Disadvantages
- expensive
- time-consuming
- labour force needs to be highly skilled

Question 7

Batch production

Answer 7

producing a limited number of identical products - each item in the batch passes through one stage of production before passing on to the next stage
Advantages:
- allows firm to use division of labour
- enables some gain from economies of scale if the batch is large enough
- allows each individual batch to be specifically matched to the demand.
-> design can be easily altered
Disadvantages:
- high levels of work-in-progress stocks
- demotivate workers
- adjust machinery after each batch has passed through

Question 8

Flow production

Answer 8

producing items in a continually moving process
Features:
- specialised, often expensive, capital equipment, but can be very efficient
- high steady demand for standardised products
Advantages:
- low unit costs due to constant working of machines
- high labour productivity
- economies of scale
Disadvantages:
- inflexible - often very difficult and time consuming to switch from one type of product to another
- expensive to set up

Question 9

Mass customisation

Answer 9

the use of flexible computer-aided production systems to produce items to meet individual customers’requirements at mass-production cost levels.
Requirements:
- many common components
- flexible and multi-skilled workers
- flexible equipment - often computer-controlled to allow for variations
Advantages:
- combines low unit costs with flexibility to meet customers’ individual requirements
Disadvantages:
- expensive product redesign may be needed to allow key components to be switched to allow variety
- expensive flexible capital equipment needed.

Question 10

Factor to choose production method

Answer 10

1. Size of the market
2. Amount of capital available
3. Availability of other resources
4. Market demand exists for products adapted to specific customer requirements