AQA A level Business - Unit 4

Buffer Stock

spare stock held just-in-case there's an unexpected demand upturn or an unwanted delay in supplies arriving.

Efficiency

refers to how effectively a firm uses its resources. It can be measured in a number of ways, including labour productivity and wastage rates.

Innovation

this means taking an idea for a new product or process and turning it into a commercial success.

Just-in-time

production is based on zero buffer stocks that is, new supplies arrive just when they are needed.

Lean production

instead of mass producing, the firms produces good to order and therefore satisfies the customer while helping to avoid stockpiles of unsold stock.

Productivity

measures how efficiently a firm turns inputs into the production process to output. The most commonly used measure is labour productivity, which looks at output per worker.

first mover advantage

the benefits to distribution and brand credibility from beating rivals to the market with an innovative new product.

Kaizen

continuous improvement.

Total quality management

a passion for quality that starts at the top, then spreads throughout the organisation.

Downtime

any period when machinery is not being used in production.

excess capacity

when there is more capacity than justified by current demand

capacity utilisation

measures a firms output level as a percentage of the firms maximum output level.

capital intensive

has a large percentage of its total costs tied up in the fixed costs of purchasing and operating machinery

labour intensive

using the staff to the up most.

Unit costs

Total costs / Unit output

Labour productivity

Output per period / No. of employees per period

Factors of production

Land

Labour

Capital

Enterprise

Quality assurance

Improves throughout business

Quality control

Inspectors check each stage

Zero defects

eliminatiing quality defects by getting things right first time.

Trade-off

accepting less of one thing to achieve more of another.

Lead time

the time the supplier takes between receiving an order and delivering the goods.

Mass customisation

producing flexibly on a mass production assembly line, giving the twin benefits of customer satisfaction and cost effectiveness.

Opportunity cost

the cost of missing out the next best alternative when making a decision.

Stock holding costs

the overheads resulting from the stock levels held by a firm.

capacity utilisation calculation

(actual output/maximum possible output) x100

Managing inventory

its once you have a way of controlling your goods or stock that a business holds.

Supply chain

Is the series of activities involved in taking the initial resources to providing the final product

economies of scale

a proportionate saving in costs gained by an increased level of production.

diseconomies of scale

occur when a business grows so large that the costs per unit increase. As output rises, it is not inevitable that unit costs will fall. Sometimes a business can get too big!

Outsourcing

Is when a business uses an outside supplier to manufacture goods or provide services to the business