Operations
The purpose of business is to get inputs and ____ _____ to the output
Add value
producing output at the highest ratio of output to input
Efficiency
Another name for Stock
Inventory
JIT stands for
Just in Time
the proportion of maximum output capacity currently being achieved
Capacity utilisation
is concerned with the use of resources called inputs – land, labour and capital – to provide outputs in the form of goods and services.
Operations
involving a high level of labour input compared with capital equipment.
Labor Intensive
the normal time taken between ordering new stocks and their delivery
lead tie
Working capital tied up in goods in storage could be put to another use. I
opportunity costs
exists when the current levels of demand are less than the full capacity output of a business – also known as spare capacities
Excess Capacity
The process of converting inputs into outputs
Transformation
meeting the objectives of the enterprise by using inputs productively to meet customers’ needs.
Effectivness
the optimum or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs
Economic order quantity
Costs associated with Inventories have to be held in secure warehouses. They o! en require special conditions, such as refrigeration.
Storage costs
reducing capacity by cutting overheads to increase e! iciency of operations, such as closing a factory or o! ice department, o# en involving redundancies
Rationalization
intangible capital of a business that includes human capital (well trained and knowledgeable employees), structural capital (databases and information systems) and relational captial (good links with supplier and customers)
intellectual Capital
involving a high quantity of capital equipment compared with labour input.
Capital intensive
the minimum inventory level that should be held to ensure that production could still take place should a delay in delivery occur or should production rates increase
Buffer inventory
If inventories are not used or sold as rapidly as expected, then there is an increasing danger of goods deteriorating or becoming outdated.
Risk of wastage and obsolescence
when a business produces at maximum output.
Full Capacity
the ratio of outputs to inputs during production, e.g. output per worker per time period
Productivity
converting inputs into outputs.
Production/Transformation
businesses will hold inventories in three distinct forms
Raw materials, work in progress and Finished Goods
Keeping low inventory levels may mean only ordering goods and supplies in small quantities
Small order quantities
using another business (a ‘third party’) to undertake a part of the production process rather than doing it within the business using the firm’s own employees.
outsourcing