section 4 operations managment terms

Intellectual capital

intangible capital of a business that includes human capital (well-trained/skilled employees), structural capital (databases/information systems) + relational capital (good links w/suppliers/customers)

Transformational process

activity/group of activities that transforms 1/more inputs, adds values to them + produces outputs for customers

Productivity

the ratio of outputs to inputs during production (eg. output per worker per time period)

Level of production

the no. of units produced during a time period

Production

the process that transforms inputs into outputs

Efficiency

producing output @ the highest ratio of output to input

Effectiveness

meeting the objectives of the business by using inputs productively to meet customers’ needs

Sustainability of operations

business operations that can be maintained in the long term (eg. protecting the environment/not damaging the quality of life for future generations)

Labour intensive

involving a high level of labour input compared w/capital equipment

Capital intensive

involving a high quality of capital equipment compared w/labour input

Job production

production of a 1-off item specially designed for the customer

Batch production

production of a limited no. of identical products - each item in the batch passes through 1 stage of production before passing on to the next stage

Flow production

the production of items in a continually moving process

Mass customisation

use of flexible computer-aided technology on production lines to make products that meet individual customers’ requirements for customised products

Inventory

materials/goods held by a business + required to allow for the production of products + their supply to the customer

Inventory management

process of ordering, storing + using a company’s inventory

Economic order quantity

the optimum/least-cost quantity of stock to re-order taking into account delivery costs + stock-holding costs

Buffer inventory

minimum inventory level that should be held to ensure that continuous production is possible should delivery delays occur/output increase

Re-order quantity

no. of units ordered each time

Lead time

time b/w ordering new supplies + their delivery

Re-order level

level of inventory that triggers a new order to be sent to suppliers

Supply chain

network of all the businesses + activities involved in creating a product for sale, stating w/the delivery of raw materials + finishing w/the delivery of the finished product

Supply chain management

handling the entire production flow of a product (from raw materials to finished product) to minimise costs but improve customer service

Just-in-time (JIT) inventory management

aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production + completed products are produced to order

Just-in-case (JIC) inventory management

aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels

Maximum (full) capacity

the highest level of sustained output that can be achieved

Capacity utilisation

the proportion of maximum output capacity currently being achieved

Outsourcing

using another business (a 3rd party) to undertake a part of the production process rather than doing it w/in the business using the firm’s own employees

Excess (/spare) capacity

when the current levels of output are less than the full-capacity output of a business

Rationalisation

reducing capacity by closing factories/production units

Capacity shortage

when demand for a business’s products exceeds production capacity

Business process outsourcing (BPO)

a form of outsourcing that uses specialist contractors to take responsibility for certain business functions (eg. human resources/finance)