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IBBusinessDPBusiness ManagementHLFlashcards5. Operations Management5.6 Production Planning

5.6 Production Planning (DP IB Business Management)

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    What is meant by the term supply chain management?

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  • What is meant by the term supply chain management?

    Supply chain management is the coordination and scheduling of the manufacturing process to ensure products are produced efficiently and in the quantities needed.

  • What does stock control involve?

    Stock control involves planning, implementing and monitoring the movement of raw materials, components, work-in-progress and finished goods.

  • Define the term quality control.

    Quality control is ensuring output meets standards so that the end product is safe and meets customer expectations.

  • True or False?

    Global supply chains involve activities within a single country.

    False.

    Global supply chains require activities to be coordinated across international borders.

  • What is Just-in-Time (JIT) stock control?

    Just-in-Time stock control is where raw materials are delivered to a business as and when they are needed to be used in the production process.

  • What is Just-in-Case (JIC) stock control?

    Just-in-Case involves holding spare stock to ensure that there is always more than enough stock to meet production requirements.

  • True or False?

    Just-in-Case allows for bulk-buying discounts.

    True.

    Just-in-Case allows for bulk-buying discounts.

  • True or False?

    Holding little or no stock means that a business is at greater risk from external factors.

    True.

    Holding little or no stock means that a business is at greater risk from external factors.

  • Define the term lead time.

    Lead time is the length of time from the point of stock being ordered from the supplier to it being delivered.

  • True or False?

    Just-in-Case minimises stockholding costs.

    False.

    Just-in-Time increases stockholding costs.

  • True or False?

    A business's approach to stock management is influenced by key decision makers' attitudes toward risk.

    True.

    A business's approach to stock management is often influenced by the attitudes of management towards risk.

  • What is a stock control chart?

    A stock control chart is a diagram that shows how stock moves into and out of a business over time.

  • What is the maximum stock level?

    The maximum stock level is the maximum amount of stock a business is able to hold in normal circumstances.

  • What is the reorder level?

    The reorder level is the level at which a business places a new order with its supplier.

  • What is the minimum stock level?

    The minimum stock level, also known as the buffer stock level, is the lowest level to which a business is willing to allow stock levels to fall.

  • True or False?

    A downward slope on a stock control chart indicates stock is being used up.

    True.

    A downward slope on a stock control chart indicates stock is being used up.

  • What does an upward shoot in the stock level line indicate?

    An upward shoot in the stock level line indicates that an order has been delivered by a supplier.

  • What is the reorder quantity?

    The reorder quantity is the difference between the maximum stock level and the minimum stock level.

  • What problems may arise from holding too much stock?

    Problems from holding too much stock may include

    • Higher storage costs

    • Increased risk of stock shrinkage or spoilage

    • The need to sell excess stock at a lower price

  • True or False?

    Holding too little stock has no risks for a business.

    False.

    Holding too little stock risks production stoppages, higher unit costs due to underused capacity and the inability to meet sudden increases in demand.

  • What is stock shrinkage?

    Stock shrinkage is the loss of inventory due to factors such as theft, damage or errors in record-keeping.

  • True or False?

    Complex stock control technologies eliminate the impact of external factors on stock management.

    False.

    Even businesses with complex stock control technologies can be affected by unanticipated external factors, impacting their ability to receive, distribute or use stock.

  • What is meant by the term stockout?

    Stockout refers to a situation where a business completely runs out of stock.

  • What is capacity utilisation?

    Capacity utilisation is a measure of how effectively a business uses its assets to produce output.

  • State the formula used to calculate capacity utilisation.

    Formula.

    Capacity space utilisation space equals space fraction numerator Current space output over denominator Maximum space possible space output end fraction space cross times space 100

  • True or False?

    Low capacity utilisation typically decreases unit costs.

    False.

    Low capacity utilisation typically increases unit costs because fixed costs are spread over fewer units of output.

  • What is the main potential benefit of capacity under-utilisation?

    The main potential benefit of under-utilisation is increased flexibility to respond to sudden increases in demand.

  • What is the defect rate?

    The defect rate is the proportion of output that is judged to be substandard in a given time period.

  • State the formula used to calculate the defect rate.

    Formula.

    Defect space rate space equals space fraction numerator Number space of space defective space items over denominator space Total space output end fraction space cross times space 100

  • What is labour productivity?

    Labour productivity is a measure of output per worker during a specified period of time.

  • State the formula used to calculate labour productivity.

    Formula.

    Labour space productivity space equals space fraction numerator Output over denominator Number space of space workers end fraction

  • What is capital productivity?

    Capital productivity is a measure of the output of capital employed (e.g. machinery) during a specified period of time.

  • State the formula used to calculate capital productivity.

    Formula.

    Capital space productivity space equals space fraction numerator Output over denominator space Number space of space machines end fraction

  • True or False?

    Businesses aim to minimise capital productivity.

    False.

    Businesses aim to maximise capital productivity as expenditure on machines is likely to be high.

  • What is cost to buy?

    Cost to buy (CTB) is the total cost of purchasing a product from an external supplier.

  • State the formula used to calculate the cost to buy.

    Formula.

    Cost space to space buy space equals space left parenthesis Purchase space price space cross times space Quantity right parenthesis space plus space Delivery space costs

  • What is cost to make?

    Cost to Make (CTM) is the total cost of manufacturing a product in-house.

  • State the formula used to calculate cost to make.

    Formula.

    Cost space to space make space equals space left parenthesis Average space variable space cost space cross times space Quantity right parenthesis space plus space Fixed space costs

  • Give two qualitative factors that should be considered when making make or buy decisions?

    Qualitative factors in make or buy decisions include:

    • Capacity

    • Quality

    • Reliability

    • Core competency

Previous:5.5 Break-Even AnalysisNext:5.7 Crisis Management & Contingency Planning

    1. Topic 1

      1.1 What is a Business?

    2. Topic 2

      1.2 Types of Business Entities

    3. Topic 3

      1.3 Business Objectives

    4. Topic 4

      1.4 Stakeholders

    5. Topic 5

      1.5 Growth & Evolution

    6. Topic 6

      1.6 Multinational Companies (MNCs)

    1. Topic 1

      2.1 Introduction to Human Resource Management

    2. Topic 2

      2.2 Organisational Structure

    3. Topic 3

      2.3 Leadership & Management

    4. Topic 4

      2.4 Motivation & Demotivation

    5. Topic 5

      2.5 Organisational (Corporate) Culture

    6. Topic 6

      2.6 Communication

    7. Topic 7

      2.7 Industrial Relations

    1. Topic 1

      3.1 Introduction to Finance

    2. Topic 2

      3.2 Sources of Finance

    3. Topic 3

      3.3 Costs & Revenues

    4. Topic 4

      3.4 Final Accounts

    5. Topic 5

      3.5 Profitability & Liquidity Ratio Analysis

    6. Topic 6

      3.6 Efficiency Ratio Analysis

    7. Topic 7

      3.7 Cash Flow

    8. Topic 8

      3.8 Investment Appraisal

    9. Topic 9

      3.9 Budgets

    1. Topic 1

      4.1 Introduction to Marketing

    2. Topic 2

      4.2 Marketing Planning

    3. Topic 3

      4.3 Sales Forecasting

    4. Topic 4

      4.4 Market Research

    5. Topic 5

      4.5 The Marketing Mix (7 P's)

    6. Topic 6

      4.6 International Marketing

    1. Topic 1

      5.1 Introduction to Operations Management

    2. Topic 2

      5.2 Operations Methods

    3. Topic 3

      5.3 Lean Production & Quality Management

    4. Topic 4

      5.4 Location

    5. Topic 5

      5.5 Break-Even Analysis

    6. Topic 6

      5.6 Production Planning

    7. Topic 7

      5.7 Crisis Management & Contingency Planning

    8. Topic 8

      5.8 Research & Development (R&D)

    9. Topic 9

      5.9 Management Information Systems

    1. Topic 1

      6.1 The Business Management Toolkit