HSC Operations Management

Comprehensive practice flashcards covering the HSC Operations Management topic, including the strategic role of operations, influences, transformation processes, and key operations strategies.

What is operations management, and what is its primary goal in production?

Operations management involves transforming inputs into outputs through business processes, with the goal of adding value so the finished output is worth more than all inputs combined.

What is the strategic role of operations in achieving profit maximisation?

Operations contributes to profit maximisation by implementing cost leadership (keeping production costs low) and differentiation (increasing product value and revenue).

Why is operations classified as a cost centre, and what is the primary aim of cost leadership?

It is a cost centre because it does not directly create income but generates operational expenses; cost leadership aims to achieve the lowest costs or be the most price-competitive in the market.

How can businesses achieve economies of scale (EOS) to lower production costs?

By increasing the scale of operations to spread fixed costs across more units of production, afford efficiency-improving machinery, and secure bulk discounts such as a $20\%$ bulk order discount.

What are augmented features in good differentiation?

Add-ons and additional benefits offered alongside a product rather than its standard base features.

What is cross branding (strategic alliances), and what example is cited in the notes?

An alliance formed between two businesses to offer combined benefits to consumers; an example is Uber partnering with Spotify so passengers can play their favourite songs during a ride.

What is the difference between standardised and customised goods?

Standardised goods are mass-produced and uniform in quality, whereas customised goods are tailored to meet the specific needs of individual consumers.

What operational requirements are specific to perishable goods compared to non-perishable goods?

Perishable goods require short lead times, efficient distribution, and appropriate packaging and storage, whereas non-perishables require close management of quality and inventory levels.

What are intermediate goods?

Semi-finished goods that enter the production process more than once to be manufactured further.

How is interdependence defined among the key business functions?

The mutual reliance that the four key business functions (Operations, Marketing, Finance, and Human Resources) have on each other to work effectively and achieve common goals like profit maximisation.

How does the finance function interact with operations strategy?

Finance provides the necessary funds that determine which operational strategies can be implemented, balancing cost leadership against quality objectives and funding investments in facilities and technologies.

What opportunities does globalisation present to operations management?

Access to new overseas consumer markets, expanded supply chain management with cheaper raw materials, and production cost savings from outsourcing to countries with lower labour costs and rent.

What is the distinction between administrative technologies and process technologies?

Administrative technologies assist with organisation, planning, and decision-making (e.g., Gantt charts, scheduling tools, office software), while process technologies physically carry out manufacturing, logistics, and quality management (e.g., robotics, CAD, CAM).

What are the three criteria used to evaluate the quality of tangible goods?

Quality of design (innovation and quality of materials), fitness for purpose (how well the product functions and its ease of use), and durability (lifespan, maintenance, and repairability).

What are the three criteria used to measure the quality of intangible services?

Professionalism (staff manner and physical environment), reliability (competence and timeliness of delivery), and level of customisation (tailoring the service to individual customer needs).

How can an operations manager reduce variable costs in production?

By sourcing lower-cost inputs, bulk buying supplies, automating production, and adopting lean production techniques to eliminate waste.

How does legal compliance differ from ethical responsibility under Corporate Social Responsibility (CSR)?

Legal compliance is the mandatory adherence to laws and regulations enforced by penalties and fines, whereas ethical responsibility involves voluntarily exceeding legal minimums to uphold the 'spirit of the law'.

What are transformed resources, and what three categories do they comprise?

Inputs that are converted, changed, or incorporated during the production process; they include materials (raw and intermediate), information (internal and external data), and customers.

What are transforming resources, and what two main types exist in operations?

Inputs that execute the transformation process without being consumed in the output; they consist of human resources (employees) and facilities (plants, machinery, equipment, and technology).

According to the 4 V's model, what operational combination generates the lowest production costs?

High volume, low variety, low variation in demand, and low visibility.

What is volume flexibility, and why is it important?

How quickly the operations process can adapt to changing customer demand; a slow response leads to either high inventory costs and wastage (overproduction) or lost sales and profits (underproduction).

What is the difference between sequencing and scheduling in operations planning?

Sequencing specifies the order in which operational activities occur, whereas scheduling outlines the specific time taken to complete each activity.

What planning tool is depicted in this production schedule for cocoa beans, boxes, and chocolate delivery?

A Gantt chart.

What is the key scheduling rule when determining total project duration using Critical Path Analysis (CPA)?

The critical path represents the longest sequence of dependent activities, which dictates the minimum time needed to complete the entire project.

Which workplace layout type is illustrated by this medical facility arrangement?

A process layout, where equipment and departments are grouped according to the specific function or process they perform.

Which workplace layout type is illustrated by this progressive vehicle assembly diagram?

A product layout, where machinery and workstations are arranged linearly according to the sequence of production steps.

When is a fixed position workplace layout applied?

When the product being constructed is too large, heavy, or fragile to be moved easily, requiring workers, equipment, and materials to be brought directly to the site.

What does Kaizen mean in the context of operations improvement?

The ongoing practice of seeking continuous improvement in quality, process flows, costs, speed, and overall production efficiency.

How can tracking warranty claims assist operations managers in improving transformation processes?

Monitoring warranty claims identifies recurrent product defects, pinpoints operational breakdowns, and directs quality management interventions (such as Samsung resolving the Galaxy Note 7 battery flaw).

What are the six primary performance objectives in operations strategy?

Quality, speed, dependability, flexibility, customisation, and cost.

What is the distinction between explicit and implicit services in service design and development?

Explicit service refers to the tangible delivery of skill, effort, and time, while implicit service refers to the psychological feeling, atmosphere, and customer experience created.

What is procurement, and what are two main advantages of global sourcing?

Procurement is the process of locating and purchasing business inputs; global sourcing provides access to lower input costs and a wider selection of specialised technologies and resources.

What are two disadvantages associated with business outsourcing?

Potential communication or language barriers with contractors, and the loss of direct control over product quality and internal operational skills.

How does leading-edge technology differ from established technology in operations?

Leading-edge technology represents the most advanced, innovative, and unproven solutions currently available, whereas established technology consists of proven, widely accepted, and routinely integrated systems.

How does the First In, First Out (FIFO) inventory method impact financial statements during inflation compared to Last In, First Out (LIFO)?

Under inflation, FIFO produces a lower cost of goods sold, higher reported gross profit, and higher ending inventory valuation, whereas LIFO produces a higher cost of goods sold and lower reported gross profit.

What is Just In Time (JIT) inventory management, and what is its primary operational benefit?

An inventory method where supplies are delivered only as required for production, minimising holding space, waste, and warehousing costs in lean production systems.

How does Quality Control (QC) differ fundamentally from Quality Assurance (QA)?

Quality Control is a reactive process that inspects samples during and after production to eliminate defects, while Quality Assurance is a proactive system that integrates standards across design to prevent defects from occurring.

What are the four pillars of Total Quality Management (TQM)?

Benchmarking against standards, empowering employees to suggest modifications, maintaining a customer-focused perspective, and committing to continuous improvement.

What are the primary financial costs that create resistance to change in operations?

Purchasing new equipment, redundancy payouts to displaced workers, retraining staff on new systems, and reorganisation expenses when altering the plant layout.

What is inertia in the context of business operations, and what causes it?

A psychological resistance to change driven by employees' fear of job loss/replacement by technology, fear of learning complex tasks, and a preference for workplace stability.

What proportion and dollar amount of revenue does Cochlear invest in Research and Development (R&D)?

Cochlear allocates approximately $15\%$ ($\$184\text{m}$) of its revenue to Research and Development to sustain its technological competitive advantage.