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Operational Objectives/ Performance 4 (Why operate below 100% demand lower…
Operational Objectives/ Performance 4
OPERATIONS MANAGEMENT
Management & processes, decisions delivered
TRANSFORMATION PROCESS
Value added, increase costs and profits
Added Value
cost manufacture to sell price, increase costs, speed and quality
Cost & Volume
'unit costs' efficiency, scale production, low price, improve profit: + sales or - costs
Quality
customer knowledge, demand, complain, share info, defect rate, reliability, satisfaction
Efficiency/Flexability
cost target, effectively, - UC, unexpected changes in demand, labour prod
Speed Response
compete price goods, faster, competitive advantage, some pay more quality
Envionmental
legislation, + importance, efficiency
Innovation
idea (product) + price/value, loyalty, good rep (process) - costs, improve quality, flexibility +profit
Internal Influences
Corporate ovhectives (most important) Finance (investment, cost) HR (service) Investment (training, effectiveness) Marketing (nature)
External Influences
Economic (demand impact change, strain) Comp (quicker, efficiency, pressure) Tech (innovate) Legal (regulations) Change customer needs (behave ethically)
Efficiency
control costs
Labour Intensive
labour costs outweigh capital costs
Labour Productivity
+workforce/ training invest equipment
Unit Costs
cost make one FC (no change) VC (change with output)
Economies of Scale
arise UC- output +,
Capacity Utilisation
95% good,
Cause Spare
new comp, -demand, change taste, seasonal AD (time maintenance, plan, less pressure) DIS (FC per unit, - profit)
Profitability
+=+revenue, cost money, -FC, -VC, + capacity, ensure future demand
Why operate below 100%
demand lower expected, loss market share, seasonal, unexpected orders
Danger too low
(+UC, FC spread less unit, capital tied up)
How +
(invest capital machinery, employee training, change prod process)
Deal under-utilisation
change market strategies, +promo, -price, subcontract)
More 100%?
(+workforce, -time maintain production equipment)
Problem + capacity
(neg effect quality, employee suffer)