business - operations

• the operations department controls:

  • purchase raw materials
  • managing stock control
  • choosing the method of production
  • quality control
  • distribution of goods
• tangible goods


  goods you can touch
• intangible goods


  goods you cannot touch
• these are: inputs

  • land - (natural recourses)
  • labour - (people, work, ideas)
  • capital - (machinery, tools, workplace)
• suppliers


  people who provide the raw materials.
• before buying raw materials business need to take into consideration:

  • price
  • quality
  • quantity
  • delivery time
  • reliability
  • location
• the amount of stock in a business depends on:

  • storage space available
  • finance available
  • daily usage
  • delivery time
  • demand
• overstocking


  where the business has too much stock
• understocking


  where the business has too little stock
• overstocking leads to:

  • high storage costs
  • products may go out of date
  • products may go out of fashion
• understocking leads to:

  • nothing else to make
  • customers go elsewhere
  • poor reputation
  • orders cannot be met
• 5 factors must be considered when calculating stock:

  • maximum stock level
  • minimum stock level
  • reorder level
  • reorder quantity
  • lead time
• methods of production:

  • job production
  • batch production
  • flow production
• job production


  a single product is made from start to finish before the next one has started
• advantages of job production

  • can take personalised orders
  • high prices can be charged
  • workers are motivated (variety of work)
• cons of job production:

  • expensive
  • a variety of equipment needed
  • personalised orders are time consuming
• batch production


  a number of groups of products are made at one time through stages
• pros of batch production:

  • flexible production
  • goods can be stored and completed later
• cons of batch production:

  • making small batches is costly
  • additional costs
• flow production


  production of items moves continuously from one operation to the next
• pros of flow production:

  • large quantities can be made
  • machinery can work 24/7
  • reduced costs
• cons of flow production:

  • purchase and upkeep or machinery is expensive
  • individual/personalised orders cannot be met
  • repetitive work
  • machines break = production stops
• why is quality important?:

  • builds customer loyalty
  • builds a good reputation
  • customers are less likely to use competitors
  • encourages new customers
  • waste is minimised
• quality control


  checking and reviewing work that has been completed through samples, inspections and testing. about detecting errors rather than preventing them
• pros of quality control:

  • poor products are not sold
  • company gains good reputation if quality is high
  • can develop higher profits
• cons of quality control:

  • poor products are scrapped
  • leads to a lot of waste
  • expensive
• quality circles


  small groups of workers meet up regularly with management to discuss where improvements can be made in the production process
• pros of quality circles:

  • workers motivated
  • more productivity
  • workers feel included
• cons of quality circles:

  • can be hard to organise times for everyone to meet regularly
• quality assurance


  products are checked through various staged of the production process to make sure there are no errors
• pros of quality assurance:

  • costs are reduced
  • less wastage
• cons of quality assurance:

  • time consuming
  • costly process
• recycling


  businesses should try to recycle where possible to cut down on waste disposal costs and help the environment
• packaging


  businesses need to take steps to reduce the amount of packaging in their products to reduce waste.
• fair trade


  involves suppliers of raw materials receiving a fair price for their goods
• benefits of being ethical:

  • business gains a good reputation
  • business gains recognition
  • wastage costs reduced
  • can charge higher prices
  • business can gain awards
• costs of being ethical:

  • materials and renewable sources can be costly
  • training can incur additional costs
  • fair wages = less profit
• EPOS


  records stocks by automatically deducting and reordering stocks when required
• email


  used to contact and communicate with suppliers
• internet


  websites can be used to compare prices and suppliers and place orders