Operations Management - F292 OCR

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Why do businesses grow?
Greater profits, Increased market share, higher chances of survival and cost reductions.
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Types of growth?
Internal(organic) growth and external growth.
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What is internal growth?
Natural growth of a firm achieved by increased production and sales.
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What is external growth?
Growth achieved by takeover and merger.
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What is capacity?
The maximum that a firm can produce in a given period with the available resources.
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What is capacity utilisation?
The percentage of total capacity that is actually being achieved in a given period.
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How do you calculate capacity utilisation?
Capacity utilisation (%) = actual level of output / maximum possible output x100
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What is economies of scale?
A reduction in unit costs achieved as the scale of production increases.
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What is internal economies of scale?
Internal economies of scale are achieved as a result of a firm growing internally.
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What examples of internal economies of scale?
Purchasing, Financial, Managerial, Technical, Marketing, Risk-Bearing.
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What examples of external economies of scale?
Concentration, Information.
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What is diseconomies of scale?
An increase in unit costs as a result of an increased scale of production.
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What is labour-intensive?
Involving a high proportion of workers in the production process compared with machinery or other capital equipment.
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What is capital-intensive?
Involving a high proportion of capital equipment in the production process compared with the use of labour.
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What are the four methods of production?
Job production, Batch production, Flow production, Cell Production
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What is job production?
Goods are produced one at a time to match the specific needs of customers.
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State two advantages and disadvantages of job production.
A - A large increase in added value, Increased staff motivation. D - Time-consuming production, Higher production costs.
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What is batch production?
Each group of goods passes through every stage of the production process together.
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State two advantages and disadvantages of batch production.
A - Faster then job production, Greater ability to meet customer demand. D- Lower motivation, Higher stock levels.
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What is flow production?
Goods 'flow' in a continuous fashion through the production process.
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State two advantages and disadvantages of flow production.
A - Low unit costs, Increased levels of output. D - Lack of worker motivation, Less worker responsibility.
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What is cell production?
Small teams or 'cells' of workers are located close together; each group produces whole units or carries out one of the processes in a larger facility.
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State two advantages and disadvantages of cell production.
A - Greater teamwork, Workers become multi-skilled. D - Requires teamwork, Output can be less than flow production.
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How do firms choose the best method?
Type of product, Demand for the product, quality level demanded by customers, size of the firm, avaliability of technology.
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What is lean production?
A collection of methods that attempt to reduce waste in the production process.
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What is mass production?
Use of flow production techniques in large-scale markets.
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What is Toyota Production System (TPS)
A system operated by Toyota in its production facility, which developed the concept of lean production.
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Advantages and disadvantages of lean production
A - Incrased motivation of the staff, Increased quality of output. D - Can reduce the opportunity to gain economies of scale which can be expensive. Requires all staff to be in favour.
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What is time-based management?
Methods that reduce the time it takes to develop and produce a product in order to reach the market more quickly.
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Lean production versus mass production? State 2 comparisons.
Mass production - High levels of stock, Flow production (continuous) Lean Production - Reduced stock levels (just in time?), adaptable production (often cell and/or batch)
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What is quality
features of a product that allow customers to be satisfied with their purchase.
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How can product quality be judged?
Good function, Durability, Reliability, Image, After-sales service, Value for money.
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Advantages of producing quality goods?
Higher prices, Reduction in Waste, Less need to advertise.
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What are quality circles?
Meetings of groups of workers from different levels and sections of an organisation to seek improvements in quality.
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Two Advantages/disadvantages of quality circles.
A - Increase the motivation of staff, improve communication. D - Cost and time, Resentment among staff not involved.
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What is work-in-progress?
The amount of stock tied up as it moves through the factory
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What are the three categories that stock can be put into?
Stocks of raw materials, Stocks of finished goods, Stocks of work-in-progress.
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What is the buffer stock level?
The minimum amount of stock that the firm wishes to keep.
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What is the lead time?
The time it takes for an order to be recieved by the firm.
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What is stock rotation?
A method designed to ensure that the earliest stock brought in by the firm is the stock that is used up first.
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What is quality control?
Inspection of products as part of a sampling process to ensure that agreed standards have been reached.
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What is quality assurance?
Instilling quality throughout the organisation as part of the process of production.
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Two advantages/disadvantages of quality control?
A - Quality is the job of experts, Defective products are spotted. D - The workforce becomes sloppy. Not every product is checked.
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Two advantages/disadvantages of quality assurance?
A - Workers take more care, increased motivation of workforce. D - Increased demands on the workers, Some products may not need it.
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What is total quality management?
An extension of quality assurance in which everyone in the production process is encouraged to produce the required product first time.
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What is Kaizen?
The process of achieving continuous improvements in the workplace through workers regularly finding small ways of improving what they do.
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Two advantages/ disadvantages of Kaizen?
A - It helps lower the breakeven point, It helps eliminate waste and improve processes. D - Kaizen can be tricky to implement, The cost of setting up a kaizen system can be a problem.
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What is benchmarking?
A process of comparing a firm's products and production processes against those judged to be the best in the industry.
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One advantage/ Disadvantage of benchmarking?
A - Clear and attainable targets can be set, based on the experience of others. D - It may be tricky to gain accurate data,
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What is Just-in-time?
A production system in which raw materials, work-in-progress and finished products are delivered at the precise time they are required.
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What is Kanban?
A card system used in just-in-time, whereby a card follows each item through the production process and is the trigger for stocks to be ready.
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Two Advantages/Disadvantages of Just-in-time?
A - Reduced stock levels, Avoids overproduction. D - Requires good communication, Supply problems.
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What forms of waste are there?
Overproduction, Waiting, Transportation, Over-Processing, Stock, Poor Factory Layout, Scrapping/reworking defective products.
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What is waste management?
An attempt to reduce anything that makes the production process inefficient.
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How can waste management be improved?
Introducing just-in-time - stops overproducing. Improving links with suppliers - reduces problems with idle machinery. Better factory layout. Improved quality control - reduces the need to scrap materials.
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Other cards in this set

Card 2


Types of growth?


Internal(organic) growth and external growth.

Card 3


What is internal growth?


Preview of the front of card 3

Card 4


What is external growth?


Preview of the front of card 4

Card 5


What is capacity?


Preview of the front of card 5
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This set of 55 flash cards provides definitions of most of the key terms in operations management. They can be used to test yourself or for joint revision.

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