2.3 Making operational decisions

• What is the function of business operations?

  Organizes, produces, and delivers goods
• What types of products can businesses produce?

  Tangible goods and intangible services
• What is the process of transforming raw materials into finished goods called?

  Production
• What does economies of scale refer to?

  Lower cost per item with increased production
• Why do companies gain economies of scale when buying in bulk?

  Reduced managerial costs and packaging
• What are the three main production methods?

  1. Job production
  2. Batch production
  3. Flow production
• What is job production?

  When individual products are made one at a time to meet customer preferences
• What are the advantages of job production?

  Low setup cost and tailored products
• What are the disadvantages of job production?

  Time-consuming and requires skilled labor
• What is batch production?

  Production of goods in groups or batches
• What is a key feature of flow production?

  High volumes and low margins
• What are the advantages of flow production?

  Efficient process and low cost per unit
• What are the disadvantages of flow production?

  High initial costs and repetitive work
• How is productivity defined?

  Output per worker over a period
• What impact does technology have on production?

  Increases productivity and reduces costs
• What is specialization in production?

  Each worker focuses on specific tasks
• What are the advantages of specialization?

  Increased productivity and lower unit costs
• What are the disadvantages of specialization?

  Boredom and less flexible workforce
• How does technology influence unit costs?

  Increases production and spreads fixed costs
• What is the impact of technology on quality?

  Increased consistency and reduced waste
• What is a bargate stock graph?

  A tool to control and monitor stock flow
• What does lead time refer to in stock control?

  Time between order placement and delivery
• What is the reorder level in stock management?

  Stock level that triggers a new order
• What is buffer stock?

  Stock held for unforeseen circumstances
• What is the reorder quantity?

  Point at which a new stock order is placed
• What is the just-in-case stock control method?

  Holding stock to prepare for demand spikes
• What is the relationship between batch production and flexibility?

  Batch production allows some flexibility
• What is the impact of technology on production flexibility?

  Allows for changes in products produced
• What is the significance of the maximum stock level?

  It prevents overstocking and waste
• What is the importance of stock control methods?

  To manage inventory efficiently and reduce costs
• What is the purpose of a stock control diagram?

  To visualize stock levels and reorder points
• What does the term 'fixed costs' refer to?

  Costs that do not change with production volume
• How can businesses reduce waste in production?

  By improving quality and consistency
• What is the significance of monitoring productivity over time?

  To assess workforce efficiency and growth
• What is the role of technology in balancing production costs?

  Reduces costs while increasing output
• What is the impact of technology on workforce efficiency?

  Increases output per worker
• What is the relationship between production methods and product types?

  Different methods suit different product types
• What is the importance of setting targets for unit costs?

  To maintain quality while reducing costs
• What is the significance of a computerized stock control system?

  Automates ordering and tracking of stock
• What is the purpose of buffer stock in inventory management?

  To handle unexpected demand or supply issues