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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
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