business unit 4 operational performance

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what are some operational objectives?
quality,added value, costs, flexibility, efficiency, innovation, environment, speed of response and dependability
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what do cost objectives do?
help lower a business' unit costs by either reducing their variable or fixed costs.
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what are unit costs?
the costs for a business to produce 1 unit of product.a cost that a business wants to be as low as possible but doing this we need to be sure that products are of good quality
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how can we drive unit costs down?
by making labour more efficient and increasing our productivity
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what is the formula for unit costs?
total costs / units of output
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what is added value
it means increasing the difference between the cost of the raw materials and the price the customer is paying
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whats the formula for added value?
sales revenue - cost of materials and services
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punctuality is based around which operational objective?
quality
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whats the formula for punctuality?
deliveries on time / total deliveries (x100)
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what are some environmental objectives based around?
noise pollution, energy contributions, use of renewable resources, recycling
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what is innovation?
the process of taking an idea and turning it into a commercial success
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whats efficiency?
comparing whats been produced/performed with what can be achieved with the same consumption of resources
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what can managers do to improve efficiency?
use machinery to speed up process and make it more automated, add Quality checks during production, find cheaper raw materials, implement staff training
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how can we asses/measure operational performance?
labour productivity, unit costs, capacity and capacity utilisation
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what is labour productivity?
the output per worker in a given time, helps us see how efficient the workforce are and see if training is needed or appraisals
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how do we measure labour productivity?
output per period / no of employees per period
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how can we increase labour productivity?
set objectives for workers, increase output by maximising productivity, replace inefficient staff, lower labour turnover, offer training, offer rewards and motivate, replace staff with automation
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what is capacity?
maximum output with the resources currently available
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what does capacity depend on?
the number of employees and their skill, the technology business has, amount of investment in the business, production process.
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what is capacity utilisation?
the amount of capacity that a business is using e.g-a b&b with half rooms booked has 50% capacity utilisation
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whats the formula for capacity utilisation?
output / capacity (x100)
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how can a business increase its capacity?
use their facilites more of the working week, buy more machines, increase staff levels long run-permanent staff and short run- temp and part time staff
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if theres a temporary/unexpected rise in demand what can a business do?
subcontract/outsource work
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what is subcontracting/outsourcing?
when a business uses another firm to do work on its behalf
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what is underutilistion?
where a firm has low capacity utilisation making the business more inefficient
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what is rationalisation?
improving efficiency by cutting the scale of operations by sales of assets, decreasing its workforce and reducing hours and work patterns
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whats capacity shortage?
when a business doesnt have sufficient capacity to deal with the demands for their products
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why is capacity storage good?
maximum productivity meaning the unit costs are at their lowest,resources are being used efficiently.
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why is capacity storage a bad thing?
hard to grow a business and take more orders and may lose customers to another business
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what is efficiency?
a way to reduce costs and make the most possible from out outputs.
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what are a business' main inputs?
land, labour capital and enterprise
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how can we increase efficiency?
improve our inputs (land labour enterprise and capital), provide training for our workforce, increase scale of production and improve capital/labour balance
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what is lean production?
a form of production which looks at reducing waste and time saving methods
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why would we use lean production?
to help business' meet some operational objectives such as costs, addded value and the environment
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what is just-in-time production?
keeps stock vey low, thus reducing a business' material waste by having as little stock as possible.
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advantages of just in time production
high productivity levels mean lower unit costs and efficient workforce and high motivation levels, reduction in waste costs meaning better environmental objectives met too.
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disadvantage of just in time production
loss of (eos), breakdown in production if suppliers are late, limited time to asses quality
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whats time based management?
an approach aimed to reduce any wasted production time, trying to be the fastest to produce and may make more money.
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advantages of time based management
reduces lead times so cost of holding stock can fall, customer needs can also be satisfied quicker giving them a competitive advantage, multifunctional machinery gives a more varied product range,
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a disadvantage of time based management
sometimes it can justify quality of products/services.
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what is kaizen?
a way to improve lean production which requires continuous, small incremental changes to a business to reduce their waste and improve quality
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an advantage of kaizen
employees input is needed,should motivate staff, reduce costs and small changes are easier to make
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A disadvantage of kaizen
may not work, small changes may not help a business keep up with demand changes etc.
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what are the four methods of production?
job production, batch production, flow production and cell production
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whats job production?
producing to order start to finish of a product
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advantages and disadvantages of job production?
ad- higher quality as its one batch, reduces waste, more appealing as cusotmers have a variety. disadvantages- slow production maybe more expensive requires skilled workers
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whats batch production?
making a group of the same product e.g warbatons breads
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advantages and disadvantages of batch production?
ad- your able to switch dies for pproduct etc (good product flexibility), theres less human error. disadvantages-machinery needs servicing and repairs, usually not specific to customer- business wants a wide target market to cater to.
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whats flow production?
non-stop, continuous production of identical products
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advantages and disadvantages of flow production?
doesn't require skilled worker, high productivity disadvantages- higher start up costs, rely on machinery
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what is cell production?
each member of production has a certain task in making one product, everything is to a time limit, focuses on quality
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advantages and disadvantages of cell production?
advantages- high quality less likely to have defects, happier customers, staff feel motivated and valued (reduced labour turnover) disadvantages- skilled workers required production can be slower.
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what is quality and how does it help a business?
its the degree of excellence of something. it can help to have a competitive edge over competitors and can increase revenue and reduce costs.
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why would a business want high quality products?
to have good customer satisfaction and a good reputation to customers. gives workers pride in their work and can increase morale.
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how does quality reduce costs?
less raw materials, workers and machinery time is used up from the mistakes, less advertising is needed,fewer complaints and refunds, don't need to discount items to sell damaged stock
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how can we measure quality?
punctuality, level of product returns, customer satisfaction, scrap rates.
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how can firms show quality?
through quality assurance, through systems that aim to achieve/improve quality by making sure the product is right first tie with no mistakes.
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whats quality assurance
measures are put into place during production/manufacturing so things don't go wrong in the first place , means theres less waste, checked by employees-can be motivating
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whats quality control
checking goods as you make them or when they arrive from suppliers to see if there are any faults checked by inspectors
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what is total quality management?
where the whole workforce is responsible for their quality of products
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advantages of total quality management?
can help bring the whole workforce together, creates a good brand reputation and usually produces less waste products.
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disadvantages of total quality management?
can take a long time to be introduced, can demotivate staff due to its big effort and even have set targets to achieve, can be expensive due to training needed.
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what is mass customisation?
a business offers individually tailored goods/services to customers on a large scale e.g nike id
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how can a business react to demand?
produce to order, hire part time/temporary staff and outsource
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what is 'produce to order?'
strategy which a business only manufactures a product once an order for that product has been received form a customer
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why does part time/temporary staff help our supply and demand?
helps a business fill in when they need extra help, the business can vary their hours and make them flexible for the business
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what can influence a business' choice of suppliers?
their quality, payment terms, reliability, flexibility, price and capacity
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what is a supply chain?what does it consist of?
the group of firms which are all involved in all the various processes required to make a finished product/service. it can consist of: a supply source, manufacturer, distributor and retailer
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what are the costs of holding stock?
storage costs, wastage costs, opportunity costs.
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in inventory control, what is minimum stock level
lowest stock level a business needs to have in at a given time
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in inventory control, what is maximum stock level?
the most stock a business wants to have at one point
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in inventory control, what is re-order level?
the level which new stock is ordered ,determined by the suppliers lead time lead time x average daily usage + buffer stock level
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in inventory control, what is buffer stock?
the lowest level of stock a business will hold (minimum order quantity)
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in inventory control, what is a lead time?
time it takes for a supplier to deliever/fulfill an order
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in inventory control, what is the re-order quantity?
the amount of products ordered from the supplier to replenish stock
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in inventory control, what is inventory rotation?
using the oldest stock first
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Other cards in this set

Card 2

Front

what do cost objectives do?

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help lower a business' unit costs by either reducing their variable or fixed costs.

Card 3

Front

what are unit costs?

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Preview of the front of card 3

Card 4

Front

how can we drive unit costs down?

Back

Preview of the front of card 4

Card 5

Front

what is the formula for unit costs?

Back

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