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Summary Operations management
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Summary notes for operations management.
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Operations managementAdded value – is the difference between the cost of purchasing the raw materials and the
price for which the finished good is sold for.
Added value = Selling price – cost of purchasing the raw materials
How might added value be increased:
Increase selling price
Source cheaper raw materials
Provide a delivery service to charge delivery service charge
Provide add-ons
Improve the efficiency
Create a brand status
Have a USP
3 types of job production – ways of producing goods.
Job production – single items are produced, usually to the buyer’s requirement.
(unique products) e.g., wedding dresses, suits, bridges, roads, ships, etc.
Batch production – is a method which involves manufacturing a limited number of
identical products.
Flow production – is continuous production (mass production), involves the
production of products on production lines.
What does the type of production depend on?
Range/variety of products
Quantity of products
Unique/identical products
Customer requirements
Product itself
Cost of capital and labour
Staff’s skills
Size of the market
Job production Batch production Flow production
, Advantages High quality Low unit cost Low unit cost
products and higher and very high
Customisable output output
products Economies of Benefit from
made to scale economies of
order Allows scale
Workers are flexible Automated
involved in production assembly
the entire Don’t need lines save
process specialist time and
Producer equipment money
meets Part-finished
individual goods can be
customers’ stored and
needs completed
Job later
satisfaction
for
employees
Disadvantages Labour Time is lost Need large
intensive resetting the amounts of
Cost of machine for capital to be
producing new invested to
one unit is production start a flow
higher Small production
Requires batches can business.
investment be expensive (expensive to
in skills and start up)
training Doesn’t
Longer allow for a
production wide range
time of products
Requires to be
investment produced.
in capital
specialist
equipment
Productivity – is a measurement of the efficiency with which a business turns production
inputs into outputs.
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