Unit 4

• Operations: The actual production of the good or service
• Added value  = selling price – costs of input
• Capital intensive is where production or operations depends on investment in and use of capital
• Labour intensive is where production or operations depends on investment in and use of labour
• The 4V's: Volume, Variety, Visibility, Variability
• Types of operational objectives: Cost, Quality, Dependability, Innovation, Speed
• Labour Productivity = Total output/Number of employees
• Unit costs = Total costs / Total output
• Efficiency is using its inputs more effectively
• When efficiency increases, unit costs fall
• How to improve efficiency: Improve labour productivity, Introduce lean production, Technology
• Capacity utilisation = (Actual output / Maximum output) x 100
• Firms operate at less than 100% capacity because of seasonal variation in demand or a decrease in demand
• Potential benefits of spare capacity are planning for maintenance time, buffer benefit
• If production is rushed, quality may fall
• Lean production is the process of reducing waste and making operations more efficient
• Cell production is organising production around teams instead of a production line
• Kaizen is making small changes about the way things are done which, over time, lead to major improvements
• Benefits of JIT

  Less costs in holding stock, Less working capital required, Less obsolete / ruined stock
• Disadvantages of JIT

  Little room for error, Very reliant on suppliers, Unexpected orders harder to meet
• Andon is if there is a problem the cord is pulled and production stops
• The resource mix is the combination of capital and human resources
• Quality is difficult to define and can vary according to the situation
• Quality can be measure by failure or reject rates, level of product returns, customer complaints, customer satisfaction
• To improve quality, careful selection of supplier partnership, employee training, investing in new technologies
• Quality control is a system of testing or inspecting the output against standards
• Quality assurance is the maintenance of quality by attention to detail at every stage of the process, including suppliers
• Total quality management aims for continual improvement throughout every functional area
• Quality standards are sets of criteria used to establish quality systems
• Dependability is a process starting and finishing at a stated time
• Mass customisation is the personalisation or custom-tailoring of goods or services to meet customer needs
• Mass customisation allows flexibility, maintains cost savings through producing large quantities, enables customers to decide on their own features
• Mass customisation is made possible through technologies, e-commerce and internet marketing, Lean production
• Inventory management is how a company controls its inventory as it is bought
• Just-in-time (JIT) is an approach whereby materials arrive just when they're needed by the manufacturer
• Lead times is the time it takes between the order being placed with the supplier and the stock arriving at the factory
• Buffer level of inventory is the amount of stock held
• Re-order levels are when stock falls to this point then it is re-ordered
• Vertical integration is acquiring companies up or down the supply chain
• Supply Chain: Suppliers, Manufacturing, Distributers, Retailer, Customer