Operations Key Terms

• What does adding value mean?

  The process of increasing the value or worth of a good or service
• What is buffer inventory?

  Inventory held to protect against uncertainties in demand and supply.
• What is capacity?

  The maximum output that operations can produce in a period, given their existing resources and normal methods of operating
• What is capacity utilisation?

  The percentage of operating capacity that is used in a period of time
• What is efficiency?

  The rate at which a task is performed or output is produced. This can also be a measurement of the amount of resources that production uses relative to its output.
• What is inventory?

  Inventory refers to the goods or materials that a business holds for the purpose of resale or production.
• What is an inventory control chart?

  Shows the level of stock held over time
• What is Just-In-Case inventory control?

  Inventory management strategy that aims to have enough stock on hand to meet unexpected demand or disruptions in the supply chain.
• What is Just In Time production?

  JIT processes focus on producing exactly the amount you need at exactly the time your customers need it
• What is Just In Time inventory control?

  Inventory management system that aims to minimize inventory levels by receiving goods only when they are needed in the production process.
• What is Kaizen?

  Processes to achieve continuous improvement
• What is labour productivity?

  The amount produced by an employee in a given period
• What does land refer to?

  Not just the land itself, but also all of the renewable and non-renewable natural resources on that land, such as coal and timber
• What is lead time?

  The time taken for inventory to arrive from the supplier after it is ordered
• What is lean production?

  Using resources as efficiently as possible by minimising waste and eliminating activities that do not add value, and at the same time ensuring quality
• What is logistics?

  The operations involved in transporting goods to customers
• What is operational flexibility?

  The ease with which a productive system can adapt to a changing market environment
• What is outsourcing?

  Using another business (third party) to undertake some of the functions of a business
• What is productivity?

  A measure of efficiency, not simply a change of output. It is often expressed as a measure of how efficient labour is at production in a given time
• What is quality assurance?

  Process of ensuring that a product or service meets specified requirements and standards.
• What is quality control?

  Inspecing goods recieved from suppliers or inspecting items during the production process to check for defects
• What is a reorder level?

  The inventory level at which a new order should be placed.
• What is a reorder quantity?

  The quantity of a product that is ordered to replenish inventory.
• What is a supply chain?

  A network of organizations and activities involved in the production, distribution, and consumption of goods and services.
• What is supply chain management?

  The coordination and management of all activities involved in the production and distribution of goods and services.
• What is Total Quality Management (TQM)?

  A structured approach to managing the quality of an organisation's products and services, involving the principles of "right first time" and continuous improvement, and involving all employees of the organisation
• What is the transformation process?

  The process of converting inputs into outputs.