Unit 5 Operations Management

• Operations Management: The management of business activities in order to maximise profit
• Factors of production: collective term for the resources utilised in the production process: land, labour, capital, and entrepreneurship
• (Relating to factors of production)

  Land: Natural Resources needed to produce goods & services

  Labour: Human effort used to produce goods /services physically & intellectually

  Capital: any manmade resources used in the production process such as tools, machinery, vehicles, and infrastructure

  Entrepreneurship: The knowledge, experience and skills of those involved in the production process
• Capital intensive: When a business is heavily reliant on the use of machinery and equipment to produce goods and services.
• Specialisation: Division of large tasks into smaller tasks allowing individuals to focus on their strengths. Essential for mass and flow production
• Standardisation: Producing identical product in large quantities
• Batch production: A production method in which a large number of identical products are produced at one time.
• Flow Production: Continuous and progressive processes carried out in sequence, when one task is completed, the next stage of production starts immediately
• Job production: Manufacturing which is done for a specific customer or entity. For example, tailoring, engineering, etc.
• Cellular production: When different stages of production are seperated to independent cells where each cell is responsible for a different stage of production e.g. engine assembly
• Lean production: The approach used to eliminate waste in the process of production. Maximising productivity and lower costs
• Cradle to Cradle Production (C2C) : Production which ensures that a product is designed to be recycled and reused
• Just-In-time (JIT) - A manufacturing system in which raw materials and finished goods are delivered to the production line as they are needed
• Kaizen: Japanese production focusing on continuous improvement of each worker's performance
• Quality assurance: Methods used by business to reassure customers that the product upholds a certain standard of quality
• Infrastructure: Describing the transportation, communication, and support networks in a certain area.
• Clustering: When a business locates near other businesses in similar or complementary markets
• Footloose organisation: When a business does not gain any cost-reducing advantages from its location and can therefore locate almost anywhere
• Assisted areas: Low income areas where the government provides an influx of cash to regenerate the area
• Bulk-Increasing Businesses: Involved in products which increase in weight throughout the production process, and need to be located near customers due to this
• Bulk-Decreasing business: Manufacturing needs to be located near raw materials as they are heavier (more expensive) to transport than the final product
• Industrial Inertia: Reluctance to change location due to its inconvenience
• Stocks: Materials, Components, products used in production process
• Just-In-Case (JIC) Production: Stock management system which provides buffers in case of unexpeced fluctuations in supply or demand
• Re-order level: The level that stock reaches before a new order is placed
• Re-order quantity: Amount of new stock ordered once the reorder level is reached
• Lead time: Duration between placing order and receiving it
• Capacity Utilization: Measures existing level of output as a proportion of its potential output
• Usage rate: the rate of which stocks are depleted
• Make or buy decision: The decision made between ordering a product or manufacturing it, by comparing the cost to make (CTM) and cost to buy (CTB)
• Paradigm innovation: Radical change of innovation that is so notable it disrupts existing markets
• Contingency planning: Being proactive to changes in the business environment by planning responses to negative events
• Quantifiable risks: Risks which can are probable and financially measurable such as fire damage.