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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.