Business - Operations Test Flash Cards

Scottish Nat 5 Business Operations Flash Cards

How do you choose a supplier?

1. Price Charged / Discount terms.

2. Quality.

3. Quantity.

4. Storage Space.

5. Lead time / Delivery time / Delivery cost.

6. Credit Terms.

7. Location of supplier.

8. Reliability.

How do you know which quantity to order?

1. Current stock.

2. Finance & Space Available.

3. Lead Time.

4. Daily Usage.

5. Potential Demand.

What features does effective stock control have?

1. A process for regular inventory checks.

2. Costs minimised.

3. Security systems in place to prevent theft.

What are the Benefits / Costs of managing stock?

Benefits

• Supplies at hand when needed.

• Discounts for buying bulk.

• Quick demand increases can be met.

• No customer waiting times.

Costs

• Money could be freed for other activities.

• Warehouse and insurance costs.

• Stock may expire or fashion may change and become obsolete.

• Labour costs.

What is Minimum Level?

This is the level that stock should not fall below, that ensures there will always be enough stock for production.

What is Maximum Level?

This is the highest level of stock that should be held, and often is the full capacity in terms of storage space and finance.

What is the Re-order level?

This is the point at which businesses order new stock from the supplier.

What is Lead Time?

This is the time it takes for stock to be ordered and delivered.

What are Overstocking Costs?

1. High storage costs.

2. High maintenance costs.

3. High security costs.

4. High insurance costs.

5. Space taken up.

6. Money tied up - poor cash flow.

7. Stocks left unsold may deteriorate, become obsolete, or spoil.

8. Changes in trends and fashion may mean existing stock becomes unpopular.

What are Under stocking Costs?

1. Not able to cope with changes in demand.

2. If deliveries are delayed you may run our of stock - stop production.

3. Less able to cope with unexpected shortages of materials.

4. Reputation - if you have to wait on stock to supply customers.

What are Costs and Benefits of Manual Inventory Control?

Benefits

• Affordable

• Simply adjusted.

Costs

• Prone to errors.

• Outdated data.

What are Costs and Benefits of Computerised Inventory Control?

Benefits

• Accurate

• Real time data.

Costs

• Costly

• Training Required

What are the 3 Methods of Production?

• Job Production

• Batch Production

• Flow Production

What is Job Production?

This is producing one product from start to finish by a single or team of workers. This is known as being labour intensive and examples are a wedding dress or cake.

What is Batch Production?

This is a number of similar or identical products produced in groups. This is known as being mechanised and examples are Greggs or Magnum.

What is Flow Production?

This is where a product goes from stage to stage on an assembly line, with parts being added at each stage. This is known as being heavily automated and capital intensive and examples are bottling machines or a car manufacturer.

What are the 4 Methods of Production?

• Labour.

• Capital.

• Automation.

• Mechanisation.

What is Labour?

This system is one where the organisation uses workforce instead of machinery to complete production.

What is Capital?

This is where the production system uses more machinery and other capital equipment than it does labour.

What is Automation?

This is when production is fully automatic.

What is Mechanisation?

This is Labour and machines working together.

What are the Job Production Costs and Benefits?

Costs

• Labour costs are high.

• High investment cost (specific tools).

• Production is expensive in cost and time.

Benefits

• Can suit orders to customer.

• Customer can make changes during production.

• Highly skilled workers find this work satisfying.

• high prices can be charged for quality.

What are the Batch Production Costs and Benefits?

Costs

• Small batches can be expensive to produce.

• May be delays due to different production runs which means cleaning / setting up equipment.

• Repetitive work (reduced motivation)

Benefits

• Allows flexible production (can match demand)

• Part finished goods can be held and finished later.

• Workers all specialise in a specific area.

What are the Flow Production Costs and Benefits?

Costs

• Standard products produced.

• High set up costs.

• Repetitive work (reduced motivation).

• Long productions may produce extra product.

Benefits

• 24/7 production

• Large quantity of goods produced.

• Cost efficient due to less labour.

• Quality systems can be built in.

What are some factors to consider when choosing and appropriate method of production?

• The product and quantity required.

• The skills of the workforce.

• The size of organisation and market.

• The finance available.

• The technology available.

What are some benefits of using quality measures for the customer?

1. Product is made using high quality material.

2. It has a high standard of workmanship.

3. It works well.

4. It is reliable.

5. It meets the packaging specifications.

6. It is environmentally friendly.

What are some benefits of using quality measures for the business?

1. Customer demands are satisfied.

2. Safety standards and legal requirements are met.

3. Confidence in products.

4. Premium prices can be charged.

5. Repeat custom and better reputation

What are some uses of Quality Input?

1. High quality raw material.

2. Trained staff.

3. Up-to-date equipment.

What is Quality Control?

This involved the inspecting of a sample of the raw materials at the start (input) of production and at the final product stage (output).

What are some advantages and disadvantages of Quality Control?

Advantages

• Ensures quality.

• Customer satisfaction.

Disadvantages

• Staff training required.

• Costly.

What is Quality Assurance?

This is a planned approach to checking products at regular intervals - at each stage of the production process. This is to try catch problems earlier.

What are some advantages and disadvantages of Quality Assurance?

Advantages

• Easy to identify faults.

• Improved motivation.

Disadvantages

• Slower production.

• It costs a lot more due to consistency.

What is Quality Management?

This ensures that zero errors are made in the production process.

What are some advantages and disadvantages of Quality Management?

Advantages

• Teamwork / Motivation.

• Reduced Waste.

Disadvantages

• Strict selection / commitment.

• Monitoring.

What are Quality Circles.

This is when a group of employees meet with management at various levels in order to discuss problems in the production process, with the aim to find a solution.

What are some advantages and disadvantages of Quality Circles?

Advantages

• Promotional teamwork.

• Lots of ideas.

Disadvantages

• Uses up time.

• Training required.

What is Benchmarking?

This is a process of quality assurance that uses the best performers in a particular industry to set standards for others to meet.

What are some advantages and disadvantages of Benchmarking?

Advantages

• Good comparison.

• Identify areas of improvement.

Disadvantages

• Copycats.

• Difficult to gather info.

What are some things a business can do to become Ethical?

1. Living wages are paid.

2. No child labor or sweat shops.

3. Fair employee treatment.

4. health and safety laws.

5. Fairtrade.

What are some things a business can do to become Environmentally Friendly?

1. Waste reduction.

2. Recyclable packaging.

3. Minimise packaging.

4. Invest in solar panels.

5. Sustainable development.

What are some benefits and costs of being Environmentally Friendly?

Benefits

• Can be used as a unique selling point.

• Limits waste.

• Reduction of pollution.

• Improves business image.

• Gives competitive edge.

• Customer loyalty.

• Win awards.

• Reduces costs.

• Charge premium pricing.

• Increases profit and sales

Costs

• Can be more expensive.

• Increased staff costs.

• Increased cost of ethical supplier.

• Ongoing maintenance costs.

• Employee training required.

• Research and development costs are higher.

• Production may be slower.

What are some benefits and costs of being Ethical?

Benefits

• Enhanced brand image.

• Higher employee satisfaction.

• Customer trust increased.

• Competitive edge.

• Positive word of mouth.

• Less legal risks.

Costs

• Other companies can charge lowers costs for same product.

• Increased staff wages.

• Employees have to be trained.

• Product development and research costs are higher.

What can technology do for a business?

It can increase efficiency in the operations department eg metal detectors, online ordering, barcodes, e-mail.

What are some benefits of using technology in a business?

1. Costs are reduced.

2. Time is saved.

3. Improved accuracy.

4. Enhanced flexibility.

5. Better decision making and access to information.