w/o flashcards

• What is the definition of production in operations management?

  Production is the amount of output produced or the number of customers served.
• How is productivity measured?

  Productivity measures the output compared to the inputs/resources used.
• If a company produces 100 units with 5 employees, what is the labour productivity?

  $20 \text{ units per employee} \, (100 \text{ units} / 5 \text{ employees})$
• What does efficiency refer to in operations management?

  Efficiency refers to how well resources are used to produce products with minimum waste and low cost.
• What can inventory consist of?

  Inventory can consist of raw materials, components, parts, work-in-progress, and finished goods.
• What is lean production?

  Lean production is a Japanese philosophy that improves efficiency by reducing time, waste, resources, and labour time in the production process.
• What are two key elements of lean production?

  Two key elements of lean production are just-in-time stock control and Kaizen (continuous improvement).
• What does just-in-time (JIT) inventory control involve?

  JIT stock control involves holding minimal levels of stock and arranging deliveries so that orders arrive just as they are needed in the production process.
• What does Kaizen mean?

  Kaizen means continual improvement and involves making small incremental improvements in the production process.
• What is job production?

  Job production involves making each product individually to the specific requirements of the customer.
• What is an example of job production?

  An example of job production is a tailor-made suit.
• What is batch production?

  Batch production involves producing small quantities of identical products at the same time in a group or batch.
• What is an example of batch production?

  An example of batch production is bakery products.
• What is flow production?

  Flow or mass production involves large scale production of identical products along a continuous production line, which is often automated.
• What is an example of flow production?

  An example of flow production is electronic goods.
• What are fixed costs (FC)?

  Fixed costs are those costs that do not change with the level of output.
• What is an example of fixed costs?


  An example of fixed costs is rent.
• What are variable costs (VC)?

  Variable costs are costs which change directly in line with output.
• What is an example of variable costs?

  An example of variable costs is raw materials.
• How are average costs (AC) calculated?

  Average costs are calculated as total costs divided by output.
• If total costs are $200 and output is 50 units, what are the average costs?

  $AC =$$\frac{200}{50} =$$4 \text{ dollars per unit}$
• What are total costs (TC)?

  Total costs are the total sum of all the costs involved in the business.
• How are total costs calculated?

  Total costs are calculated as fixed costs plus variable costs.
• What are economies of scale?

  Economies of scale are the cost benefits and efficiencies of large-scale production which lead to lower unit costs (average costs).
• What are purchasing economies?

  Purchasing economies occur when buying in large quantities, allowing discounts to be negotiated which reduces unit costs.
• What are marketing economies?

  Marketing economies occur when fixed marketing costs are spread over a larger output or number of customers, leading to lower unit costs.
• What are financial economies?

  Financial economies occur when larger businesses have access to a greater range of sources of finance and can negotiate better terms and lower interest rates, leading to lower unit costs.
• What are managerial economies?

  Managerial economies occur when larger businesses can afford to employ specialist managers, leading to greater efficiency and better decision-making, resulting in lower unit costs.
• What are technical economies?

  Technical economies occur when larger businesses can invest in better technology and machinery, increasing productivity and reducing waste, leading to lower unit costs.
• What are diseconomies of scale?

  Diseconomies of scale are the cost disadvantages and inefficiencies of large-scale production, which lead to higher unit costs (average costs).
• What is break-even output?

  Break-even output is the level of output at which total costs are exactly matched by total revenue, resulting in neither profit nor loss.
• What is the margin of safety?

  The margin of safety is the difference between the actual level of output and the break-even point.
• What is quality control?

  Quality control is where a product is checked at the end of a production process.
• What is quality assurance?


  Quality assurance involves self-checking throughout the production process by all employees to prevent mistakes from happening.