PRODUCTION REVISION QUESTIONS PART 3

?
Business must keep stock so that they can what?
make their products
1 of 71
State the main purpose of holding stock
to have enough materials to cover production
2 of 71
State one thing that stock includes
Raw materials bought from suppliers
3 of 71
State one thing that stock includes
Work in progress
4 of 71
State one thing that stock includes
finished goods
5 of 71
State another main purpose of holding stock
to cover shortages of supply i.e. buy in enough stock just in case it becomes difficult to buy in the future
6 of 71
State what it means if Businesses are holding too much stock
Stock is expensive to keep: Storage, insurance, deterioration, handling costs, can get damaged, go out of date
7 of 71
State what it means if Businesses are holding too much stock
Occupies space in the premises
8 of 71
State what it means if Businesses are holding too much stock
It ties up the businesses money which could be spent elsewhere
9 of 71
State what it means if Businesses are holding too much stock
May not sell all of the stock
10 of 71
State what it means if Businesses are holding too much stock
Take advantage of bulk purchases
11 of 71
State what it means if Businesses are holding too much stock
Some stock might get stolen from the warehouse
12 of 71
State what it means if Businesses are holding too little stock
Business may run out of stock so it can't make any more products
13 of 71
State what it means if Businesses are holding too little stock
Business may not be able to cope with unexpected increases in demand
14 of 71
State what it means if Businesses are holding too little stock
If deliveries are late the firm may need to halt production
15 of 71
State what it means if Businesses are holding too little stock
Will not gain discount for bulk purchase
16 of 71
State what it means if Businesses are holding too little stock
Higher admin costs, as business needs to place more orders
17 of 71
On a traditional stock control diagram What is the re-order level?
the level of stock where new supplies are ordered
18 of 71
On a traditional stock control diagram What is the re-order quantity?
amount re-ordered
19 of 71
On a traditional stock control diagram What is the buffer stock?
safety stock in case of a sudden increase in demand or supply failure
20 of 71
On a traditional stock control diagram What is the lead time?
the time between ordering supplies and the supplies arriving. Depends on: number and quality og suppliers and the nature of the product
21 of 71
On a traditional stock control diagram What is the stock out?
the firm runs out of stock e.g.due to an unexpected increase in demand or failure of suppliers to deliver
22 of 71
State one reason why the traditional stock control diagram is a good method
It makes sure that you keep some stock in reserve so that the business shouldn't run out
23 of 71
State one reason why the traditional stock control diagram is a good method
It sets a limit on how much stock you hold so you shouldn't have too many of the problems from holding too much stock
24 of 71
State one reason why the traditional stock control diagram is a good method
sensible and easy for a business to follow
25 of 71
State one reason why the traditional stock control diagram is flawed
the business still needs to keep lots of stock on the premises and this is expensive
26 of 71
What is the name of a new method of stock control?
Just In Time (JIT)
27 of 71
State a feature of Just in Time
J.I.T stock control aims to minimise stock levels by ordering stocks at short notice only when they are needed
28 of 71
State a feature of Just in Time
this involves a very close links with suppliers
29 of 71
State a feature of Just in Time
Suppliers often relocate so they are closer for deliveries
30 of 71
State a feature of Just in Time
Suppliers must see themselves as part of the production team
31 of 71
How does Just in Time work?
Customer places order with business
32 of 71
How does Just in Time work?
Business orders in parts from suppliers
33 of 71
How does Just in Time work?
Product is produced to meet customer order
34 of 71
How does Just in Time work?
Product is ready for customer within the time frame
35 of 71
State an advantage of Just in Time
No need to hold large amounts of stock
36 of 71
State an advantage of Just in Time
Reduction in warehousing costs
37 of 71
State an advantage of Just in Time
Reduction in other costs: handling, insurance, ordering, deterioration and theft
38 of 71
State an advantage of Just in Time
Little wastage as orders can be matched with demand
39 of 71
State an advantage of Just in Time
Increased quality- suppliers agree that materials have no defects
40 of 71
State an advantage of Just in Time
Suppliers guarantee that materials will be delivered quickly
41 of 71
State an advantage of Just in Time
Suppliers can be charged if they fail to meet a standard
42 of 71
State a disadvantage of Just in Time
Rely too heavily on the supplier
43 of 71
State a disadvantage of Just in Time
Company not wholly in control of its production
44 of 71
State a disadvantage of Just in Time
If the supplier is late or fails to deliver then the business has real problems as it will run out of stock and production may have to stop
45 of 71
State a disadvantage of Just in Time
Vulnerable if quality is not there
46 of 71
What is lean production for a business?
Lean production tries to make the business "fitter"
47 of 71
What is the aim of lean production?
is to produce more by using less, by reducing all forms of waste
48 of 71
How does a business become more lean?
Lean production uses JIT stock control so the business doesn't need to keep lots of stock on the premises
49 of 71
How does a business become more lean?
Lean production uses Kaizen. Lean production businesses are constantly looking for ways to increase production levels and efficiency
50 of 71
How does a business become more lean?
Managers will look at how space is being used in the factory
51 of 71
How does a business become more lean?
Managers will look at how many employees they need in each section
52 of 71
What does Kaizen mean?
Kaizen is a japanese word meaning continuous improvement
53 of 71
State a benefit of lean production
the business becomes more efficient
54 of 71
State a benefit of lean production
production levels increase
55 of 71
State a benefit of lean production
reduces the businesses costs
56 of 71
What is economies of scale?
is a business way of saying the benefits of being big
57 of 71
What is the Technical Economies?
A business saves on production costs by being able to afford better machinery e.g. Robotics to make the goods faster and cheaper
58 of 71
What is the Managerial Economies?
A business can employ specialist managers who will improve efficiency by finding better ways of doing things
59 of 71
What is the Financial Economies?
A large business is more likely to be able to borrow larger sums of money and negotiate a lower rate of interest
60 of 71
What is the Risk-bearing Economies?
A large business will have a range of products so that it doesn't put all its eggs in one basket
61 of 71
What is the Purchasing Economies?
A large business will get discounts from its suppliers for buying in bulk
62 of 71
What is the Marketing Economies?
A large business can afford large scale advertising but also will be able to negotiate cheaper rates
63 of 71
What is the benefit of economies of scale?
By reducing its average costs the business is able to sell its product cheaper than its competitors. If it chooses to it could leave its selling price alone and enjoy higher profit margins
64 of 71
What is the diseconomies of scale?
If the business grows too fast or becomes too big to be managed efficiently average costs begin to increase
65 of 71
State one reason why diseconomies of scale happen
More difficult to control: as the business grows it's harder for the management to supervise staff and to make sure that everyone is working together
66 of 71
State one reason why diseconomies of scale happen
Poor communication: as the business expands the chain of command gets longer. There are more layers in the hierarchy and messages can become distorted
67 of 71
State one reason why diseconomies of scale happen
Staff motivation falls: workers often feel more isolated and less appreciated in a larger business and so their loyality and motivation diminishes. It's harder for managers to stay in day to day contact with workers builds up a good team environment
68 of 71
State a factor to decide the size for the business
The size of the market: a small market is likely to be supplied by small firms but a large market gives the business the opportunity to become a large business
69 of 71
State a factor to decide the size for the business
The amount of capital needed: some businesses need lots of money to set up
70 of 71
State a factor to decide the size for the business
The motives of the owners: growing bigger might mean taking on a partner or becoming a company. The owners might not want to do this
71 of 71

Other cards in this set

Card 2

Front

State the main purpose of holding stock

Back

to have enough materials to cover production

Card 3

Front

State one thing that stock includes

Back

Preview of the front of card 3

Card 4

Front

State one thing that stock includes

Back

Preview of the front of card 4

Card 5

Front

State one thing that stock includes

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all A293- PRODUCTION, EXTERNAL AND FINANCE resources »