Topic 4 of 6 · Form 5
Operations management
Inputs, transformation and outputs; efficiency, effectiveness and productivity (labour productivity = output ÷ workers); capacity utilisation = actual ÷ maximum output × 100.
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Operations
Inputs, transformation and outputs; efficiency, effectiveness and productivity (labour productivity = output ÷ workers); capacity utilisation = actual ÷ maximum output × 100.
Worked example: A factory can make 12 000 units a month but makes 9 000. Find capacity utilisation and suggest how to improve it.
9 000 ÷ 12 000 × 100 = 75% – increase sales, rent out capacity, or rationalise
Production methods
Job, batch, flow and mass customisation; automation and technology.
Inventory management
Buffer inventory, reorder level, lead time, just-in-time; inventory control charts.
Lean production and quality
Kaizen, JIT, cell production, total quality management, quality control versus quality assurance, benchmarking.
Location and scale
Factors in location decisions (quantitative: costs and break-even; qualitative: infrastructure, government); economies and diseconomies of scale; outsourcing and offshoring.
Project management
Network analysis: critical path analysis, earliest and latest start times, total and free float.
Check yourself
- What is the critical path?
- Give one risk of just-in-time.
- What is benchmarking?
Show answers
- The sequence of activities with zero float determining the minimum project duration.
- Production may stop if supplies are delayed.
- Comparing performance with the best businesses to identify improvements.
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