Setting operational objectives

• What is the operations function of a business often referred to as?

  The "engine-room" of the business
• Why is performance measurement important for the operations function?

  To ensure efficiency and effectiveness
• What should all business operations have set?

  Objectives
• What are the key objectives for operations in a business?

  • Cost & volume targets
  • Quality targets
  • Efficiency and flexibility targets
  • Environmental targets
• What is the traditional measure of cost-effectiveness in operations?

  Unit cost
• How does unit cost affect a business's competitive position?

  Lowest unit cost allows for lower prices or higher profits
• What are some objectives related to cost and volume?

  Productivity & efficiency, unit costs, contribution per unit
• What does achieving quality targets ensure for a business?

  Success and customer satisfaction
• What is one way to measure poor quality in operations?

  Scrap/defect rates
• How can customer satisfaction be measured?

  Through customer research
• What is a measure of customer loyalty?

  Percentage of repeat business
• What are the relevant objectives for efficiency and flexibility targets?

  • Labour productivity
  • Output per time period
  • Capacity utilisation
  • Order lead times
• What does capacity utilisation measure?

  The proportion of potential output achieved
• Why are environmental targets becoming important for businesses?

  Due to stricter legislation and consumer preferences
• What is one example of an environmental target?

  Use of energy
• What does compliance with waste disposal regulations measure?

  Proportion of waste to landfill
• What is a target related to raw materials in environmental objectives?

  Supplies from sustainable sources