Making operational decisions

• The purpose of business operations is to:

  ● Produce goods

  ● Product services
• JOB PRODUCTION means making a single item, according to the customer’s specific requirements
• BATCH PRODUCTION means making a specific number of a particular product
• FLOW PRODUCTION (also called ‘MASS PRODUCTION’) means the continuous production of a large number of items on an assembly line. The production process is divided into a sequence of small tasks, and workers specialise in their particular activity. Flow production is CAPITAL INTENSIVE. It uses a high proportion of machinery in relation to workers.
• PRODUCTIVITY means output per worker.
• UNIT COSTS are the average cost of producing each unit of output.The formula for unit costs = Total costs ÷ Number of units produced (‘Output’)
• Flow production increases the productivity of a business.Higher productivity leads to lower unit costs.This is because the fixed costs are spread over a larger number of units.Lower unit costs allow businesses to be more competitive by charging lower selling prices.
• If a business uses technology during its production process, it means:

  ● Productivity can be improved

  ● Unit costs can be reduced

  ● Quality can increase

  ● A business can switch between making different types of products, increasing flexibility
• A stock control chart may be called a ‘BAR GATE STOCK GRAPH’

  
• MAXIMUM LEVEL is the highest quantity of stock that a business wants to hold
• REORDER LEVEL is the stock level when the business orders new stock from its supplier.
• BUFFER STOCK is the smallest quantity of stock that a business wants to hold
• LEAD TIME is the amount of time between placing an order and receiving the stock
• JUST-IN-TIME PRODUCTION means keeping no stock of materials or finished goods.This method allows a business to save on storage costs, improve cash flow whilst their beingless danger of stock being damage or becoming out of date. However, a business may fail to meet a customers’ order on time and there is also no spare stock to meet unexpected orders
• PROCUREMENT is the process by which a business chooses its suppliers
• Factors influencing the choice of suppliers:● Cost● Quality● Lead time
• LOGISTICS is the part of the supply chain that plans, implements and controls the distribution and storage of goods and services from the supplier to the business and then from the business to its customers
• QUALITY CONTROL is the process of inspecting products and services to ensure that what customers receive is of a high standard. Quality control can be carried out through feedback or factory inspections
• QUALITY ASSURANCE is the process of carrying out quality checks at specific stages during the production process. This ensures that faults are found sooner rather than at the end of the production process. If a business sells high quality products, they can control costs more effectively and gain a competitive advantage
• CUSTOMER SERVICE means the methods used by a business to look after its current and future customers
• The SALES PROCESS are the stages of purchasing a good or service. The stages are:

  1. Product knowledge – the sales people within a business must have strong knowledge about products they are selling
  2. Customer engagement – once a potential customer shows an interest in a product then the sales process must engage them in providing information about what is it they are interested in and showing them the benefits of the product
  3. Speed and efficiency of service – customers should not have to wait too long to be engaged in a sales conversation or be served or delivered with the product
  4. Responses to customer feedback – once feedback has been gathered from customers, the business should learn from it and make changes if appropriate
  5. Post-sales service – this refers to the service given after a product has been purchased – this could involve providing technical support or dealing with complaints