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Flashcards · 9609 · A Level Topic 9
Operations management (A Level) flashcards
20 cards on A Level Topic 9, subtopics 9.1 to 9.3. Pick a subtopic or study them all.
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9.1 Location and scale
- Quantitative vs qualitative location factors
- Quantitative: can be costed, such as wages, rent, freight or grants. Qualitative: judgements that are hard to cost, such as reputation of the area, owner’s preference, staff morale or quality of life.
- Offshoring vs reshoring
- Offshoring: moving operations (production or services) to another country. Reshoring: bringing offshored operations back to the home country (for example after overseas wages rise, freight costs grow or quality and lead-time problems appear).
- Offshoring vs outsourcing
- Offshoring is about which country the work is done in. Outsourcing is about who does the work (another business). The two can combine.
- Internal vs external economies of scale
- Internal: from the firm’s own growth: purchasing, technical, financial, marketing, managerial, risk-bearing. External: from growth of the industry or area, benefiting every firm there: skilled labour pool, supplier clusters, infrastructure.
- Diseconomies of scale: internal and external examples
- Internal: communication and coordination problems, slow decisions, low motivation, duplication. External: congestion, rising wages and land prices, strained infrastructure, local labour shortage.
- Total cost is 380,000 at 40,000 units and 640,000 at 80,000 units. What happens to unit cost?
- Unit cost = total cost ÷ output. 380,000 ÷ 40,000 = 9.50; 640,000 ÷ 80,000 = 8.00. (8.00 − 9.50) ÷ 9.50 × 100 = −15.8%: economies of scale.
- A relocation costs 450,000 once and saves 90,000 a year. How long until the cost is recovered, and what should be checked?
- 450,000 ÷ 90,000 = 5 years. Check how long the saving will last (wages, freight and exchange rates change) and add non-financial effects: control, speed, image, staff and risk.
9.2 Quality management
- Quality (operations view)
- Fit for purpose: meeting the specification and customer expectations. It does not mean expensive or luxury.
- Quality control vs quality assurance
- Quality control (QC): inspecting or testing output, or samples, to find faults after the event. Quality assurance (QA): setting standards and checking the process throughout, so faults are prevented.
- Total Quality Management (TQM)
- Every employee is responsible for quality, aiming for right first time and zero defects. Workers check their own work, so it reduces the need for inspectors; but training costs and culture change take time.
- Benchmarking
- Comparing performance, processes or products with the best (a rival, a leader in another industry with a similar process, or the best unit inside the business) and using the gap to set targets and make changes.
- Benchmarking: importance and limits
- Importance: shows where the business falls short, sets realistic targets, supports continuous improvement. Limits: rival data is hard to obtain, one firm’s method may not suit another, and targets only match the best.
9.3 Operations strategy
- The three kinds of operational flexibility
- Volume, delivery time and specification. Achieved through multi-skilled staff, flexible machines, temporary contracts, outsourcing and spare capacity.
- Enterprise resource planning (ERP)
- Integrated software with one shared database and linked modules (purchasing, inventory, production, sales, finance, HR) giving real-time information. Helps inventory control, costing, capacity use and management information; limits are cost, disruption, training and reliance on accurate data.
- Lean production: aim, and the six strategies
- Aim: minimum waste (materials, time, space, effort, inventory) while meeting customer needs and quality standards. Strategies: kaizen, quality circles, simultaneous engineering, cell production, JIT manufacturing, waste management.
- Kaizen, cell production and simultaneous engineering
- Kaizen: continuous small improvements. Cell production: a team makes a whole product or part. Simultaneous engineering: design, testing and planning done in parallel rather than one after another.
- Network diagram: activity, node and dummy activity
- Activity: an arrow with a duration. Node: a circle marking the start or end of activities. Dummy: a dotted arrow with zero duration that shows a dependency.
- Total float and free float: formulas
- Total float = LFT at end − EST at start − duration. Free float = EST at end − EST at start − duration. The critical path is the longest route: the activities with zero total float.
- An activity has EST 6 at its start node, duration 4, and an end node with EST 12 and LFT 14. Find total and free float.
- Total float = 14 − 6 − 4 = 4 days. Free float = 12 − 6 − 4 = 2 days.
- Critical path analysis: benefits and limitations
- Benefits: shows the minimum project time, the critical activities and where there is slack, so resources can be moved. Limits: duration estimates may be wrong, it ignores cost and resources unless added, it is complex for big projects and needs updating.