unit 4

?
Operational objectives=
costs, environmental, quality
1 of 76
Purpose of objectives=
helps to lower business unit costs-reducing variable or fixed costs
2 of 76
Unit costs=
costs to produce one unit of product (aim to keep this as low as possible but good quality)
3 of 76
How to lower unit costs-
make labour more efficient, increase productivity
4 of 76
UNIT COST FORMULA
total costs/units of output
5 of 76
What is added value?
it is increasing the difference between the cost of the raw materials and the price the customer is paying
6 of 76
ADDED VALUE FORMULA=
sales revenue-cost of materials/services
7 of 76
What operational objective links with punctuality?
quality
8 of 76
PUNCTUALITY FORMULA=
deliveries on time/total deliveries (x100)
9 of 76
Environmental objectives=
noise pollution and recycling
10 of 76
What is innovation?
taking an idea and turning it into a commercial success
11 of 76
What is efficiency?
comparing whats been produced and what could have been produced
12 of 76
How can you improve efficiency?
use machinery, add quality checks, use cheaper raw materials and train staff
13 of 76
How to measure operational performance?
via labour productivity or unit costs
14 of 76
What is labour productivity ?
the output per worker in a given time
15 of 76
LABOUR PRODUCTIVITY FORMULA=
output per period/number of employees per period
16 of 76
How to increase productivity?
set objectives, increase output by maximising productivity, training, rewards
17 of 76
What is capacity?
it is the maximum output with the resources available
18 of 76
What does the capacity depend on?
number of employees and their skills, the technology and production process
19 of 76
Capacity utilisation is-
the capacity the business is using
20 of 76
CAPACITY UTILISATION FORMULA=
output/capacity (x100)
21 of 76
How do you increase capacity?
increase amount of machines, increase staff
22 of 76
What do businesses do if there is a sudden rise in demand?
Outsource AKA sub-contract
23 of 76
What is subcontracting?
it is when a business uses another firm to do the work for them
24 of 76
What is under utilisation?
low capacity utilisation making them inefficient
25 of 76
Rationalisation is...
improving efficiency by cutting the scale of operations by sales of assets, decreasing its workforce
26 of 76
Capacity storage is-
don't have sufficient capacity to deal with demand
27 of 76
Capacity storage benefits include-
unit costs are at their lowest, resources are being used efficiently
28 of 76
Main capacity storage drawback?
may lose customers to other firms
29 of 76
Efficiency is ?
reducing costs and making the most of inputs
30 of 76
Main inputs are-
land, labour, capital and enterprise
31 of 76
How do you increase efficiency ?
train staff, increase scale of production
32 of 76
What is lean production?
production which looks at reducing waste and time saving methods
33 of 76
Benefits of lean production-
helps businesses meet objectives such as costs, added value, environmental
34 of 76
What is Just In Time production?
keeps stock low reducing material waste
35 of 76
J.I.T production benefits-
high productivity levels means lower unit costs, high motivation levels, reduce in wasted costs and environmental objectives are met
36 of 76
J.I.T production drawbacks-
breakdown in production if suppliers are late, limited time to assess quality
37 of 76
What is time based management?
it aims to reduce any wasted production time, fastest to produce and may make more money
38 of 76
Advantages of time based management-
reduces lead time so cost of holding stock falls, customers are more satisfied, multifunctional machinery gives a more varied product range
39 of 76
Disadvantages of time based management-
quality of product or service may fall
40 of 76
What is Kaizen?
it improves lean production which reduces waste and improves quality via small changes
41 of 76
Kaizen advantages-
motivate staff, reduce costs, easy to make small changes
42 of 76
Kaizen disadvantages-
small changes may not always help a business keep up with demand
43 of 76
What are 4 methods of production?
job production, batch production, flow production, cell production
44 of 76
Job production-
+higher quality, reduced waste -slow production
45 of 76
Batch production=
making a group of the same product
46 of 76
Advantages and disadvantages of batch production-
+good product flexibility, less human error -machinery need repairs and servicing
47 of 76
Flow production is-
non-stop production of identical products
48 of 76
Advantages and disadvantages of flow production-
+don't need skilled workforce -high start up costs, rely on machinery
49 of 76
Cell production is-
each member of production has a certain job
50 of 76
Advantages and disadvantages of cell production-
+high quality less likely to have defects, staff are motivated and feel valued -skilled workers are required
51 of 76
What is quality?
it is the degree of excellence of something giving it a competitive edge which can lead to an increase in revenue
52 of 76
Why we have high quality?
gives good customer satisfaction and a good reputation
53 of 76
How does high quality reduce costs?
use less raw materials, less advertising is needed, fewer complaints and refunds
54 of 76
How to measure quality?
via punctuality, level of returns, satisfaction
55 of 76
How businesses show quality?
through quality assurances, systems that aim to achieve and improve quality
56 of 76
Quality assurance is-
measures adept into place during the production process so things don't go wrong in the first place which means less waste
57 of 76
Quality control is-
checking the goods as you make them and any faults are checked by inspectors
58 of 76
Total quality management is-
whole workforce is responsible for the quality of their products
59 of 76
Advantages of TQM-
whole workforce together, betters companies reputation, less waste
60 of 76
Disadvantages of TQM-
takes a long time to be introduced, demotivates staff and can be expensive due to staff training
61 of 76
What is mass customisation?
business offers individuality i.e..NIKE ID
62 of 76
Produce to order is-
only manufacture a product once its been ordered
63 of 76
How does having part time staff help with supply&demand?
business fill in when they need extra help as demand rises, making staff flexible
64 of 76
What businesses look for in suppliers?
quality, payment terms, reliability, flexibility, price and capacity
65 of 76
What is a supply chain?
system of organisations involved in the moving of a product
66 of 76
What does a supply chain consist of?
source-->manufacturer-->distributor-->retailer
67 of 76
What costs come with holding stock?
storage costs, wastage costs, opportunity costs
68 of 76
What is minimum stock level?
lowest stock level a business decides to hold at given time
69 of 76
What is maximum stock level?
maximum stock level a business decides to hold at given time
70 of 76
What is re-order level?
levels which new stock is ordered this is determined by the suppliers lead time
71 of 76
What is a lead time?
time it takes for a supplier to deliver an order
72 of 76
What is buffer stock?
having the lowest stock a business will hold
73 of 76
RE-ORDER LEVEL FORMULA=
lead time x average daily usage + buffer stock level
74 of 76
Re-order quantity is-
the amount of products ordered from the supplier to replenish stock
75 of 76
What is inventory rotation?
Using the oldest stock first
76 of 76

Other cards in this set

Card 2

Front

Purpose of objectives=

Back

helps to lower business unit costs-reducing variable or fixed costs

Card 3

Front

Unit costs=

Back

Preview of the front of card 3

Card 4

Front

How to lower unit costs-

Back

Preview of the front of card 4

Card 5

Front

UNIT COST FORMULA

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business resources:

See all Business resources »See all operational objectives resources »