AQA, Business, AS, Operations Management definitons.

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  • Created by: sarah
  • Created on: 21-05-10 15:22

Operations Management - The process that uses the resources of an organisation to provide the right goods or services for the customer.

Operational Targets - The goals or aims of the operations function of the business.

Unit Cost - The cost of producing one unit of output.

F...Unit Cost - Total Cost / Units of output.

F...Punctuality = ( Deliveries on time / Total deliveries ) x 100

Capacity - The maximum total level of output or production that a business can produce in a given time period. A company producing at this level is said to be producing at full capacity.

Capacity Utilisation - The percentage of a firms total possible production level that is being reached. If a company is large enough to produce 100 units a week, but is actually producing 92 units, its capacity utilisation is 92 %.

F...Capacity Utilisation = ( Actual Output per annum / maximum possible output per annum ) x 100


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Under-utilisation of Capacity - When a firms output is below the maximum possible. This is also known as excess or spare capacity. It represents a waste of resources and means that the organisation is spending unnecessarily on its fixed costs.

Capacity Shortage - When a firm's capacity is not large enough to deal with the level of demand for its products. This means that certain customers will be disappointed. Further sales may be lost if unhappy customers decide not to buy from the firm again or if negative publicity results from the firm's failure to supply.

Rationalisation - A process by which a firm improves its efficiency by cutting the scale of its operations.

Subcontracting - When an organisation asks another business to make all or a part of its product.

Stock Control - The management of levels of raw materials, work in progress and finished goods in order to reduce storage costs whilst still meeting the demands of the customer.

Non-standard orders - A business decision related to a one-off contract. Usually, the non-standard order requires a respinse to a request to supply a fixed quantity of a product at a particular price.

Quality - Those features of a product or service that allow it to satifsy (or delight) a customer.

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Quality System - The approach used by an organisation to achieve quality. Most quality systems can be classified as either quality control or quality assurance.

Quality Control - A system that uses inspection as a way of finding any faults in the good or service being provided.

Quality Assurance - A system that aims to achieve or improve quality by organising every process to get the product 'right first time' and prevent mistakes ever happening.

Total Quality Management - A culture of quality that involves all employees of a firm.

Kaizen - A policy of implementing small, incremental changes in order to achieve better quality and/or greater efficiency.

Quality Standard - A set of criteria for quality established by an organisation. The standard also requires an organisation to have systems for implementing and monitoring its standards.

BS 5750 - A british standards award granted to organisations that possess quality assurance systems that meet the standards set.

ISO 9000 - The international standard of quality assurance that is equivalent to the BS 5750.

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Customer Service - Identifying and satisfying customer needs and delivering a level of service that meets or exceeds customer expectations.

Customer Expectations - What people think should happen and how they think they should be treated when asking for or recieving customer service.

Customer Satisfaction - The feeling that the buyer gets when he or she is happy with the level of customer service that has been provided and the degree to which customer expectations have been met by the provider of the service.

Supplier - An organisation that provides a business with its materials it needs in order to carry out its business activities.

Payment Terms - The arrangements made about the timing of payment and any other conditions agreed between buyer and seller.

Just-in-time - A system where items of stock arrive just in time for production or sale.

Technology - In the business world, the application of practical, mechanical, electrical and related sciences to industry and commence.

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Automation - The use of machinery to replace human resources.

CAM - The use of computers to undertake activities such as planning, operating and controlling production.

Information and communication technology (ICT) - The acquistion, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectrons - based combination of computing and telecommunications.

CAD - The use of computers to improve the design of products.

CADCAM - An approach that combines CAD and CAM, using ICT to aid both design and the manufacture of an item.

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