Flashcards · 1BS0 · Topic 2.3

Making operational decisions flashcards

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Job, batch and flow production: Job: one item made to a customer's own specification. Batch: a group of identical items made together, then equipment changes for the next group. Flow: items move continuously along a line.
Compare job, batch and flow production on productivity, unit cost and flexibility: Job: low productivity, high unit cost, very flexible. Batch: medium on all three; time lost at changeovers. Flow: high productivity, low unit cost if the line is kept busy, low flexibility; a breakdown halts the line.
Productivity, with an example: Output per unit of input, usually output per worker. 1,050 metres of cloth made by 7 weavers = 150 metres per worker.
Impact of technology on production: cost, productivity, quality and flexibility: Cost: less labour per unit, but machines and training cost money. Productivity: more output per hour, but faults stop output. Quality: consistent, but a fault repeats until noticed. Flexibility: programmable, but some machines do one job only.
A batch workshop makes 6,000 units for £18,000; a flow line makes 24,000 for £60,000. Compare unit costs.: Batch: 18,000 ÷ 6,000 = £3.00. Flow: 60,000 ÷ 24,000 = £2.50. The flow line is 50p cheaper per unit only because it makes four times as many units.

Bar gate stock graph: what it shows: Stock level over time. The line falls as stock is used and jumps up when a delivery arrives. Key levels: maximum stock, reorder level and buffer stock.
Maximum stock 400, reorder level 160, use 40 a day, lead time 2 days. Find the buffer on arrival and the delivery size.: Buffer on arrival = 160 − (40 × 2) = 80. Delivery size = 400 − 80 = 320. Days from full to reorder level = (400 − 160) ÷ 40 = 6.
Just in time (JIT): advantages and disadvantages: Stock arrives only when needed, so very little is held. Advantages: less cash tied up, lower storage costs, less waste, less space. Disadvantages: a late delivery can stop production; more frequent orders; smaller orders may lose discounts.
Procurement and logistics: Procurement: buying the goods and services a business needs from suppliers. Logistics: moving and storing goods, to the business and to customers.
The five features of a supplier relationship named in the specification: Quality, delivery (cost, speed and reliability), availability, cost and trust.
Impact of logistics and supply decisions on a business: Costs (right order sizes and routes, or wasted transport and unused stock), reputation (on-time goods build a name; late or damaged goods spread through reviews) and customer satisfaction (right item, right time, right condition).

Quality: How well a product meets the needs and expectations of customers. Goods: materials, finish, reliability, durability, safety. Services: accuracy, courtesy, reliability, speed.
Quality control versus quality assurance: Quality control finds faults by inspecting and testing, at the end or set points, so faulty items are removed before reaching customers. Quality assurance prevents faults through systems and standards across the whole process, involving everyone and suppliers.
How quality helps control costs: Fewer faults mean less scrapped material and rework, fewer refunds and returns, and less staff time on complaints. But quality systems cost money (training, inspectors, testing), so compare cost with saving.
How quality gives a competitive advantage: Satisfied customers repeat-buy and recommend; a reputation for quality supports a higher price; quality built into a business is slower for rivals to copy than a price cut. It only works if customers notice and value it.
A pottery inspects 600 mugs and finds 36 faulty. What is the defect rate?: Defect rate = faulty ÷ items checked × 100 = 36 ÷ 600 × 100 = 6%.

The five parts of the sales process named in the specification: Product knowledge; speed and efficiency of service; customer engagement; responses to customer feedback; post-sales service.
Post-sales service: Support after purchase, such as repairs, returns and guarantees.
Why is good customer service important?: Repeat purchases and loyalty, a good reputation and word of mouth, standing out from rivals (a competitive advantage) and possibly a higher price. But good service costs money: training, extra staff, returns policies.
500 customers, 30% buy again spending £22 each. Better service lifts repeat buying to 36%. What is the extra revenue?: Before: 150 × £22 = £3,300. After: 180 × £22 = £3,960. Increase = £660.