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VCE Business Management 3/4 2017 > Operations Management > Flashcards

Flashcards in Operations Management Deck (37)
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(Definition) Tangibles are goods that can be touched: eg- manufactured goods such as the drink Yakut



(Definition) Intangibles includes services which cannot be touched: eg- services such as those performed at the hotel Mercure including a housekeeping service.


(Six categories)

(Definition) Inputs are resources used in the process of production: eg- sugar and skim milk in making Yakult

Six categories of Inputs

1. Materials
2. Labour
3. Information from a various of sources
4. Time
5. Capital equipment
6. Money

Manufacturers tend to make more use of capital equipment and materials and less labour and information
Services tend to focus more on labour, information and time and less on capital equipment.


Processes/ Transformation

(Definition) Transformation/ Processes is the conversion of inputs into outputs: eg- Yakut fermenting their ingredients in order to create the finished product of the drink.

A manufacturer transforms inputs into tangible products.
A service transforms inputs into intangible products



(Definition) Outputs refer to the end result of a businesses efforts- The service or product is delivered or provided to the consumer: eg- The drink of Yakut


Office Technology- services strategy

Office communication technologies have enabled whole markets to open up as business can reach more customers around the world.

Eg- computers, videoconferencing, EFT/EFTPOS


Customer Relationship Management (CRM) - Services strategy


(Definition) Customers Relationship Management (CRM) refers to the system that business make use of to maintain customer contact.
CRM software can be used to improved customer service and increase competitiveness, because it stores information about existing and potential customers.


Website Development - service strategy

(Explain) The Operations department may work with technology support to develop ways to make it easier for customers to purchase goods or services online or to share information.
A business may develop its website to increase the amount of information it gets from its customers and analyse this information
It can provide detailed information to suppliers for example it can make procurement activities available to potential suppliers.



(Definition) Procurement refers to the process of researching and selecting suppliers, establishing payment terms, negotiating contracts and the actual purchasing of resources that are vital to the operations of the business


Automated Production Lines - Manufacturing strategy
(key feature)

(Definition) an Automated Production line is comprised of machinery and equipment arranged in a sequence with components added to the good as it proceeds through each step, with the process controlled by computers:

eg- Yakut used a production line to clean, paint and fill the Yakut bottles.

A key feature of an automated production line is the use of robotics


Robotics- Manufacturing strategy

(Definition) Robotics is a highly specialised form of technology capable of complex tasks

- Robotics allow for a degree of precision and accuracy generally unmatched by human labour.
- economical for the business for they do not require pay increases or sick leave
- dangerous jobs to be done with robotics protecting employees from harm.

- causes retrenchment and redundancy
- Employees may fear losing their job to new technology
- can break down stopping production which can be expensive


Computer Aided Design= CAD- Manufacturing strategy

(Definition) Computer Aided Design (CAD) is a computerised design tool that allows a business to create product possibilities from a series of input parameters

It creates 3D diagrams from a set of given data (Parameters) once the design has been created it can be viewed from a range of angles assisting the designer to visualise what will be produced.


Computer Aided Manufacturing = CAM- manufacturing strategy

(Definition) Computer Aided Manufacturing is software that designs and controls manufacturing processes

(Explain) CAM is software used to allow the manufacturing process to become computer directed by designing and controlling the process.


Computer Intergraded Manufacturing=CIM-Manufacturing
strategy (Definition)

(Definition) Computer Intergrading Manufacturing (CIM) is a method of manufacturing in which the entire production process is controlled by a computer.

(Explain) CIM uses a computerised system to combine CAD and CAM to manage the entire production process.

eg- Product design, analyses, planning, purchasing, costing, inventory control and distribution


Materials Management

(Definition) Materials Management is the strategy that manages the use, storage and delivery of materials to ensure the right amount of inputs is available when required in the operations system: eg- forecasting

(Explain) Materials Management is all about managing the way that materials are received and stored, and ensuring that the materials are available in the operations management system



(Definition) is the goods and materials held as stock by the business: eg- the amount of stored skim milk powder Yakut may have for future makings of the drink.

A large inventory may ensure the business that materials will not run out; however this ensures a cost to the business. stock may taking up storage for long periods of time can mean that the business misses the opportunity to invest the money in other places.

The stock will never run out

expensive over long periods of time
materials may have a "used by date" meaning they may become unusable after a certain period.


Materials Handling

(Definition) Materials Handling is the physical handling of goods in a warehouse and at distribution points.

- more efficient production process
- Cost Saving
- reduce chances of accidents, breakage and spoilage.



(Definition) Forecasting is a materials planning tool that relies on data from the past and present and analysis of trends to attempt to determine future events.


Operations area will use forecasting to develop a production plan and reduce the uncertainty of future events. This will allow the business to decide what goods or services to produce, how to produce them and in what quantity and timing of demand for its goods or services then match supply and demand.

can be in short term (an hour, day, week, month, year)
or long term (3-5 years or the lifetime of the product)

2 Categories

Quantitive: makes use of data in numerical form through analysis of numerical facts or historical patterns in statistics from the pervious five years

Qualitative: gathers information that is usually based on the opinions of people through methods such as questionnaires and market research.


Materials Planning: Production plan

(Def) A production plan is an outline of the activities undertaken to combine resources (inputs) to creates goods or services: eg- master production schedule (MPS)

(Explain) A production plan provides the basic information necessary for detailed materials management planning. modern business typically complete materials planning by using software.


Materials Planning: Master production schedule

(Def) a Master Productions schedule is a plan that details what is to be produced and when: eg- delivery dates

(Explain) MPS is a plan that describes what is to be produced in what qualities, how and when. The plan is linked to specific delivery dates or contracts for delivery in the future.


Materials Planning: Materials requirement planning

(it must consider)

(def) Materials Requirement planning involved developing an itemised list of all materials involved in production meet the specific orders

(explain) MPR is completed after the business has a clear understanding of the quantities to be produced and the time frame involved. it is an itemized list of all materials involved in production to meet the specific orders

it must consider:
- Lead times required by suppliers; that is whether items need to be ordered weeks or months in advance.
- the exact number of inputs to complete the tasks
-the amount of stock (inventory) on hand
- purchasing procedures; for example whether the business wished to take advantage of bulk purchasing discounts offered by suppliers


Inventory Control

(def) Inventory Control ensures that costs are minimalist and that the operations system has access to the right amounts of inputs when required. eg: Bar coding and computerised stock records or Just in Time

(Explain) inventory control is a system used to ensure that costs associated with maintaining an inventory of materials are kept to a minimum. Costs can be minimised by not allowing materials to remain idle and by making sure that inputs are available for the operating system when needed. An Operating System that runs out of materials will not be able to perform at an optimum level.


Inventory Control: Just in time


(Def) Just in time is a materials management strategy that ensures that the exact amount of materials inputs will arrive only as they needed in the operations process

(explain) this approach makes sure that the right amount of materials arrive just as they are needed for production. it can reduce storage costs and reduce the risk of ant waste occurring in storage, thus increasing competitiveness. However, supplier deliveries must be reliable and materials must be received at the appropriate time.


(When managing quality a business will)

(Def) Quality refers to the degree of excellence of goods or services and their fitness for a stated purpose: eg- Quality Control and Quality Assurance

(Explain) Quality basically means that the customer gets what they wanted. A quality product has a high degree of excellence and achieves the purpose for which it was designed. a quality product should be reliable, easy to use, durable, well designed and delivered on time

When managing quality a business will:

- minimise waste and defects
- strictly conform to standards
-reduce variance in final product


Quality Control

(Def) Quality Control involves the use of inspections at various points in the production process to check for problems and defects.

(Explain) Quality control optimised a businesses production process for it reduces problems and defects in the product, using inspections at various points in the process.

(Features) Specifications or benchmarks are set before the physical checks are completed
does present as a cost as rejected products will end up as waste, unless they can be reworked and more time is needed to be added to the production process to inspect products.


Quality Assurance

(Def) Quality Assurance involves the use of a system so that a business achieves set standards in production


ISO: International Organisation for Standardisation. this provides guidelines on how a business should establish quality assurance systems by adopting specific procedures, controls and recording and documentation measures.
meeting these standards is voluntary.

can be competitive locally and internationally
increases customer satisfaction

Heavy emphasis on documentation - time consuming
Large contributions could be required from employees who are meant to uphold these standards.


Total Quality Management

(Def) Total Quality Management is an ongoing business-wide commitment to excellence that is applied to every aspect of the businesses operation by sharing responsibility among all members of the business.

(Explain) The aim of TQM is to create a defect free production process and maintain a customer focus in operations.
The adoption of TQM can also improve product quality, allowing the business to attain a competitive edge.

competitive edge
increase customer satisfaction

it can be expensive
time consuming
relies on the full participation of all employees
staff will need to be trained in customer service and problem solving
will take time to see improvements across the boarder


Employee Empowerment: Quality Circles

(Def) Quality Circles are groups of workers who meet to solve problems relating to quality.

(Exp) many business use quality circles as a means of achieving employee empowerment. teams of up to 10 workers meet regularly to solve problems related to processes design or quality.
groups often make presentations to management with their ideas, in order to improve the businesses performance.


Continuous improvement
(1 feature)

(Def) Continuous improvement involves an ongoing commitment to achieving perfection.

(Exp) Continuous improvement is a process that involves a constant evaluation of, and improvement in, the way things are done in a business. Higher and higher standards are set in continual pursuit of improvement (Kaizen).
Kaizen emphasises continuous improvement all facets of the business, from the way the CEO manages to the way assembly line workers perform their jobs.


Waste Minimisation:

(Def) Waste Minimisation is the process which the reduction of the amount of unwanted or unusable resources produced by a business in a attempt to improve the efficiency and effectiveness of operations. eg- reusing scrap materials.

- Redesigning product and packaging
- procurement of materials made from recycled materials
-Reusing scrap materials
-Improving quality control
-Exchanging waste with other businesses
-Introducing all system approaches, such as lean production

demonstrates concern for the natural environment contributing to improving the reputation of the business.