Unit 4

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Operations management
The process that uses the resources of an organisation to provide the right good or services for the customer
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Operational objectives
Specific, focused targets of the operations management function within an organisation
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Unit cost
Total cost/units of output
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Quality
Those features of a product or service that allow it to satisfy customers
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Speed of response
The time taken for a customers requirement to be fulfilled
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Flexibility
The ability of an organisation to change its operations in some way
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Dependability
Measures whether a business is 'on time' in providing for its customers needs
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Environmental objectives
The aims set by a business that indicate its commitment to helping those aspects of the environment where it has an impact
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Adding value
The process of increasing the worth of the resources by modifying them
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Value added
Sales revenue minus the cost of bought-in materials, components and services
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Labour productivity
Output per a period/ no. of employees per period
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Unit cost
Total cost/ units of output
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Capacity
The maximum total level of output or production that a business can produce in a given time period.
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Capacity Utalisation
(Actual output per/ maximum possible output)x100
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Efficiency
Output is maximised from a given level of inputs
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Economies of scale
The advantages that an organisation gains due to an increase in size. These cause an increase in efficiency, a decrease in the unit cost of production and also tend to improve labour productivity.
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Diseconomies of scale
The dis-advantage that an organisation experiences due to an increase in size. Decrease in efficiency and/ or am increase in units costs of production.
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Capital- intensive production
Methods of production that use a high level of capital equipment in comparison to other inputs such a labour e.g. a fully automated factory
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Labour- intensive production
Methods of production that use a high levels of labour in comparison to capital equipment e.g. Retailing
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Under-utilisation of capacity
When a firms output is below the maximum possible. It represents a waste of resources and means that the organisation is spending unnecessarily on its fixed assets.
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Capacity shortage
When a firms capacity is not large enough to deal with the level of demand for its products.
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Rationalisation
A process by which a firm improves its efficiency by cutting the scale of its operations
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Lean prodcution
Production based on the range of time- saving and waste- saving measures inspired by Japanese companies.
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Time based management
An approach that recognises the importance on time and seeks to reduce the level of 'unproductive' time within an organisation. Leading to quicker response times, faster product development and reductions in waster.
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Just-in-time
Items of stock arrive just at the time they are needed for production or sale. Ultimate aim is to eliminate the need for stock
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Reduced lead times
Reducing the time taken between an order being received and the final product being delivered to, or provided for the customer.
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Quality system
The approach used by an organisation to achieve quality
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Quality control
A system that uses inspection as a way of finding any faults in the good or service being provided
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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.
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Kaizen
A policy of implementing small, incremental changes in order to achieve better quality and/or greater efficiency
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Mass customisation
Offering individually tailored goods or services to customers on a large scale
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Producing to order
A strategy in which a business only manufactures a product once an order for that product has been received
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Part time workers
Permanent employees who work a limited number of hours
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Temporary workers
People whose employment is subject to a time limit
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Outsourcing
The transfer of activities, which were previously conducted in-house, to a third party, outside of the business.
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Offshoring
Used to describe outsourcing/subcontracting when the activity being transferred takes place in a different country to the contracting company
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Inventories
Items that firms need to produce for, or supply to, customers.
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Inventory control
Management of levels of raw materials, work in progress and finished goods in order to reduce storage costs while still meeting the customers demands
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Inventory control chart
A diagram that is used to register levels of stock/ inventory over a period of time.
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Buffer inventory level
The minimum level of inventory targeted by a business. The buffer level of inventory should be enough to cover for sudden increase in demand or unexpected problems.
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Reorder level
Level at which an order is placed for new inventory.
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Lead time
How long the supplier takes to deliver an item once an order has been placed
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Re order quantity
The actual number of products purchased from a supplier in a particular order
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Inventory wastage
A measure of the loss of inventory within a business
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Inventory rotation
Using old inventory before new to make sure inventory wastage is kept to a minimum
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Supplier
An organisation that provides a business with the materials it needs in order to carry out its business activities
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Supply chain
A network of sellers of raw materials, manufacturers, wholesalers and retailers
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Supply chain management
The organisation of these activities to create value for the customer and profit for the businesses involved in supplying the products
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Other cards in this set

Card 2

Front

Specific, focused targets of the operations management function within an organisation

Back

Operational objectives

Card 3

Front

Total cost/units of output

Back

Preview of the back of card 3

Card 4

Front

Those features of a product or service that allow it to satisfy customers

Back

Preview of the back of card 4

Card 5

Front

The time taken for a customers requirement to be fulfilled

Back

Preview of the back of card 5
View more cards

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