Operations

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  • Operations
    • Operations Objectives
      • Operations objectives are the targets set for the operations activities of a business
        • Cost and volume objectives are set to ensure the cost-effectiveness of the business.
        • Quality objectives mean that a business can develop a reputation to create an advantage
        • Speed of response and flexibility is linked closely to cost targets and looks at how effectively the costs of the business are being utilised.
        • Dependability objectives are important as if they have a good reputation they are more likely to be used.
        • Environmental objectives are increasingly more important as customers have more options and are more concerned about the environment
    • Operations Data
      • Labour productivity measures output per employee
        • Labour productivity = total output / number of employees
      • Unit costs measure the costs per unit
      • Capacity measure the maximum a business can produce given its existing resources
      • Capacity utilisation measures the existing output as a percentage of the maximum possible output
        • Capacity utilisation = existing output / maximum possible output X 100
    • Efficiency
      • Efficiency is the ability to use fewer inputs to produce a given output
        • Labour productivity is the amount of output per employee
        • The optimal resource mix is the combination of resources used by a business.
    • Lean Production
      • Lean production aims to reduce waste by improving quality of the product and process
        • Kaizen puts emphasis on the value of continuous improvement
        • Andon ensures that everyone learns from the process and the mistakes
        • Changes to layout can make the process more efficient and effective
        • Just-in-time avoids storage and labour costs for unnecessary waiting
    • Quality
      • Quality is measured by the extent to which an operation meets its customer requirements
        • Quality is important to remain competative
        • Poor quality can result in a loss of customers and wasted material
        • Poor quality can be a source of competitive disadvantage
    • Quality Management
      • Quality assurance - is maintenance of target quality by attention at every stage
      • Quality control - a system of maintaining standards through testing
      • Total quality management - is a philosophy of continuous improvement
    • Improving operational performance
      • Speed of response - in order to become more competitive.
      • Dependability- starting and finishing at the stated time
      • Flexibility- large scale production with individual adaptations to increase satisfaction
    • Inventory
      • Inventory refers to the goods that the business holds
        • Holding inventory uses up resources and has a high opportunity cost
    • Matching supply and demand
      • Outsourcing - giving parts of production to other businesses
      • Temporary staff - enable them to increase or decrease the workforce as required
      • Producing to order - reduces the risk of being left with unsold stock
    • The supply chain
      • This is all the provides of resources at all the stages in production
  • Maximising efficiency by lowering operating costs whilst maintaining efficiency

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