Roles of Operation Management
What is Operations Management
Operations management is the planning, organizing, coordinating and controlling of all the activities involved of the transformation of inputs into outputs.
the amount of money left over from the sale of a product after the variable costs have been deducted
contribution per unit
Batch production
The methods are capital intensive and thus involve expensive costs, including set-up costs
Disadvantage of mass/batch production
classed as a long-term strategic goal and the decision is only made by entrepreneurs or the board of directors.
Location
Business Functions affected by Operations Management
Finance
Marketing
Human Resources
Total contribution – fixed costs
Formula for profit or loss with contribution
Production of a Kit Kat bar is an example of this production method
Mass production
Production of a tailor-made product made to a specific order
Job production
Buying many components to build something bigger
Bulk increasing
What are the four business inputs?
Land
Labour
Capital
Enterprise
Breakeven formula
Fixed costs/contribution per unit
operations method that uses flexible manufacturing systems to mass produce products that meet individual consumer needs and wants.
Mass customization
producing an identical or homogeneous product in large quantities.
Standardization
The relocation of a business process (accounting for example) to another company in another country is termed
Offshoring
The triple bottom line includes these 3 things
Economic sustainability
Ecological sustainability
Social sustainability
Matthew has a tropical fish business. His fixed costs are £4800 and his variable costs are £180 and his selling costs are £300.
40 units
Advantages of this method of production include:
The business benefits from economies of scale
Automation results in lower labor costs
Mass production
List the 4 types of production methods we discussed
Job production
Mass production
Batch production
Mass customization
•Capital costs such as building, equipment costs, etc.
•Labor costs
•Transport costs
•Potential market size
•Disposable income
•Government grants or subsidies
Quantitative location factors
The role of operations management
to turn factors of production into the output of goods and services in a cost-effective way.
The Sofa Store have just released sleeper sofa in the UK. They sell the sleeper sofa for £1000. Their variable costs are £630 and their fixed costs amount to £10000.
How many units does the business have to sell to break even?
28
List 2 considerations when determining the appropriate method of production for a given product
The size of the market
Cost of labour
Cost of capital
Aims and objectives of the organization
The irregularity of orders means that production is
unpredictable, so can cause cash flow problems
Disadvantages of job production
Reducing costs while allowing businesses to focus on core activities are advantages of