unit 4

Operational objectives=
costs, environmental, quality
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Purpose of objectives=
helps to lower business unit costs-reducing variable or fixed costs
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Unit costs=
costs to produce one unit of product (aim to keep this as low as possible but good quality)
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How to lower unit costs-
make labour more efficient, increase productivity
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total costs/units of output
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What is added value?
it is increasing the difference between the cost of the raw materials and the price the customer is paying
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sales revenue-cost of materials/services
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What operational objective links with punctuality?
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deliveries on time/total deliveries (x100)
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Environmental objectives=
noise pollution and recycling
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What is innovation?
taking an idea and turning it into a commercial success
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What is efficiency?
comparing whats been produced and what could have been produced
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How can you improve efficiency?
use machinery, add quality checks, use cheaper raw materials and train staff
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How to measure operational performance?
via labour productivity or unit costs
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What is labour productivity ?
the output per worker in a given time
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output per period/number of employees per period
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How to increase productivity?
set objectives, increase output by maximising productivity, training, rewards
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What is capacity?
it is the maximum output with the resources available
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What does the capacity depend on?
number of employees and their skills, the technology and production process
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Capacity utilisation is-
the capacity the business is using
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output/capacity (x100)
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How do you increase capacity?
increase amount of machines, increase staff
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What do businesses do if there is a sudden rise in demand?
Outsource AKA sub-contract
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What is subcontracting?
it is when a business uses another firm to do the work for them
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What is under utilisation?
low capacity utilisation making them inefficient
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Rationalisation is...
improving efficiency by cutting the scale of operations by sales of assets, decreasing its workforce
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Capacity storage is-
don't have sufficient capacity to deal with demand
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Capacity storage benefits include-
unit costs are at their lowest, resources are being used efficiently
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Main capacity storage drawback?
may lose customers to other firms
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Efficiency is ?
reducing costs and making the most of inputs
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Main inputs are-
land, labour, capital and enterprise
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How do you increase efficiency ?
train staff, increase scale of production
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What is lean production?
production which looks at reducing waste and time saving methods
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Benefits of lean production-
helps businesses meet objectives such as costs, added value, environmental
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What is Just In Time production?
keeps stock low reducing material waste
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J.I.T production benefits-
high productivity levels means lower unit costs, high motivation levels, reduce in wasted costs and environmental objectives are met
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J.I.T production drawbacks-
breakdown in production if suppliers are late, limited time to assess quality
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What is time based management?
it aims to reduce any wasted production time, fastest to produce and may make more money
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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
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Disadvantages of time based management-
quality of product or service may fall
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What is Kaizen?
it improves lean production which reduces waste and improves quality via small changes
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Kaizen advantages-
motivate staff, reduce costs, easy to make small changes
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Kaizen disadvantages-
small changes may not always help a business keep up with demand
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What are 4 methods of production?
job production, batch production, flow production, cell production
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Job production-
+higher quality, reduced waste -slow production
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Batch production=
making a group of the same product
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Advantages and disadvantages of batch production-
+good product flexibility, less human error -machinery need repairs and servicing
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Flow production is-
non-stop production of identical products
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Advantages and disadvantages of flow production-
+don't need skilled workforce -high start up costs, rely on machinery
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Cell production is-
each member of production has a certain job
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Advantages and disadvantages of cell production-
+high quality less likely to have defects, staff are motivated and feel valued -skilled workers are required
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What is quality?
it is the degree of excellence of something giving it a competitive edge which can lead to an increase in revenue
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Why we have high quality?
gives good customer satisfaction and a good reputation
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How does high quality reduce costs?
use less raw materials, less advertising is needed, fewer complaints and refunds
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How to measure quality?
via punctuality, level of returns, satisfaction
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How businesses show quality?
through quality assurances, systems that aim to achieve and improve quality
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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
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Quality control is-
checking the goods as you make them and any faults are checked by inspectors
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Total quality management is-
whole workforce is responsible for the quality of their products
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Advantages of TQM-
whole workforce together, betters companies reputation, less waste
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Disadvantages of TQM-
takes a long time to be introduced, demotivates staff and can be expensive due to staff training
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What is mass customisation?
business offers individuality i.e..NIKE ID
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Produce to order is-
only manufacture a product once its been ordered
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How does having part time staff help with supply&demand?
business fill in when they need extra help as demand rises, making staff flexible
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What businesses look for in suppliers?
quality, payment terms, reliability, flexibility, price and capacity
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What is a supply chain?
system of organisations involved in the moving of a product
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What does a supply chain consist of?
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What costs come with holding stock?
storage costs, wastage costs, opportunity costs
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What is minimum stock level?
lowest stock level a business decides to hold at given time
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What is maximum stock level?
maximum stock level a business decides to hold at given time
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What is re-order level?
levels which new stock is ordered this is determined by the suppliers lead time
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What is a lead time?
time it takes for a supplier to deliver an order
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What is buffer stock?
having the lowest stock a business will hold
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lead time x average daily usage + buffer stock level
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Re-order quantity is-
the amount of products ordered from the supplier to replenish stock
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What is inventory rotation?
Using the oldest stock first
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Other cards in this set

Card 2


Purpose of objectives=


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

Card 3


Unit costs=


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Card 4


How to lower unit costs-


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Card 5




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