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Operations
N5 Business Management

Role of Operations
Operations

is about ensuring the
right resources are bought and
used to make a finished product.

Purchasing
Stock

Control
Production
Quality Management
Distribution

Advantages of Operations
Management
Lower

Costs

Improved

Quality

Customer

Satisfaction

TASK

Question
1-5

Bank

Stock
Stock
Raw

exists in 3 types:

materials
Works in progress
Finished goods

Stock Management
Holding too much
stock
Stock

ready to go
when ordered

Money

can be
invested elsewhere in
business

Stock

can go out of
fashion or spoil

Not having
enough stock
Can’t

fulfil orders

Production

may

stop
Poor

reputation

TASK

Question
6-11

Bank

Stock Control

TASK

Question
12-18

Bank

Purchasing Mix
Price
Reliability
Quality

of raw materials
Quantity
Location
Delivery Time
Working with
Suppliers

TASK

Question
19

Bank

Factors of Production
Land

– all natural resources used in
production

Labour

– all people used in production

Capital

- all items used to make other
things in production

Enterprise

– the art of bringing together
the other factors of production and
being successful

Methods of Production
Job
Batch
Flow
Added
Value

How do we select a method of
production?
The
Is

nature of the product itself

it labour or capital intensive?

Projected
Finance

sales?

available

Technology

available

TASK

Question

Bank

20-23
In

Pairs
Describe the Factors of Production for:
Shell Oil
Royal Bank of Scotland
Apple
EasyJet

Job Production
Job

Production concentrates on
producing one product from start to
finish. Once one product is complete,
another can begin.

It

is extremely labour intensive

Some examples:
Wedding

dress

Painting
House

extension

Job Production +/High

quality
product
Can customise
orders
Workers involved
in entire
production process
from start to finish

Production

costs
likely to be high
Production time
may be longer
Investment in
machinery may be
higher as
specialist
equipment may be
needed

TASK

Question
24-25

Bank

Batch Production
Batch

production enables items to be
created in bulk (‘a batch’)

General

purpose equipment and
methods are used to produce small
quantities of items that will be made
and sold for a limited time only

Commonly
Big

used in food production

Macs
Gregg’s Rolls

Batch Production +/Allows

flexible
production
Stocks of
part-finished goods
can be held and
completed later

Production

runs
of small batches
can be expensive
to produce
If production
runs are different
there may be
extra costs and
time delays in
setting up
different
equipment

TASK

Question
26-27

Bank

Flow Production
Aka

continuous production, flow
production enables products to be
created in a series of steps.

Large

amounts of goods produced
and is highly capital intensive
(machinery, automation)

Cars

are massed produced for a
large market using flow
production

Flow Production +/Economies

of scale

Automated

production lines
save time and
money
Quality systems
can be built into
the production

Standard

product

produced
(opposite of
customised)
High set-up costs
of automated
lines
Repetitive and
boring work

TASK

Question

Bank

28-31

N5 Bus Man – 2.2: Operations  BEST Ltd 25

ICT Task
Prepare

a presentation which compares
the different methods of production:
Job
Batch
Flow
Ensure

you have appropriate text, images
& examples
Include some advantages & disadvantages
Also include a short quiz to test other
learners

Quality
What
Why

is quality?

is quality important?

Definitions of Quality
“The

standard of something as measured against
other things of a similar kind; the degree of
excellence of something.” – Oxford English Dictionary

"Quality

in a product or service is not what the
supplier puts in. It is what the customer gets out
and is willing to pay for.“ - Peter Drucker

"Degree

to which a product/service fulfils
customer requirements.“ - ISO 9000:

"Number
Six Sigma

of defects per million opportunities.“ -

“Quality is everyone’s
responsibility”
- W. Edwards Deming

Quality Methods
Employees
Raw

– Investors in People

Materials – GIGO

Quality

Control

Quality

Assurance

TQM

- Quality Management

Total Quality Management
Commitment

- Everyone is
involved in quality

Get

it right first time - aims for
zero defects & wastage

Quality
Kaizen

Circles
– continuous improvement

Other Quality Methods
BSI

Kitemark

Benchmarking
ISO

9000

ISO 9000
ISO 9000 is an international standard. Inspectors check if the
company: can answer these questions.Does it have a quality policy?Is the policy understood by employees?
Does it make decisions about quality systems based on
recorded data
Are the Quality systems regularly evaluated?
Do they have records of where raw materials & products were
sourced?Does it communicate with customers about product
information, inquiries, orders, feedback, and complaints?
Does it plans new product development, with appropriate
testing at each stage?
Does it regularly review performance?
Does it deal with past & potential problems?

TASK

Question

Bank

32-38
Homework
As

part of Literacy across learning, you
will prepare and present a solo talk
on this question:

“What

does Quality mean to you?”

Ethical and Environmental
Firms

now have to socially
responsible. They can do this by:

Recycling
Less

waste
Biodegradable packaging
Low pollution levels
Fair employee working conditions
Pay workers a fair wage

N5 Bus Man – 2.2: Operations  BEST Ltd 36

N5 Bus Man – 2.2: Operations  BEST Ltd 37

TASK
Question

Bank

39-42
Go

Further

Research the following events/issues:
Exxon Valdez
Bhopal – Union Carbide
Deepwater Horizon
Walmart in China

Distribution
By

road, rail, air or sea?
Or pipeline?
Decided by:
Cost
Infrastructure
Product/service

type

An Oil Pipeline in Saudi Arabia

TASK

Question
43-48

Bank

Operations is affected by:
Internal

Factors

n
Fina
e
c

Labo
ur

External

Political

Economic

Factors

Social

Technologic
al

Technolo
gy

Environment
al

Competitive

TASK

Question
49-54

Bank

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