AICE Business Unit 4: Operations

materials and goods held by a business and required to allow for the production of products and their supply to the customer

the process of ordering

the optimum or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs

minimum inventory level that should be held to ensure that continuous production is possible should deliver delays occur or output increase

number of units ordered each time

the time between ordering new supplies and their delivery

the level of inventory that triggers a new order to be sent to suppliers

the network of all the businesses and activities involved in creating a product for sale

handling the entire production flow of a product (from raw materials to finished product) to minimize costs but improve customer service.

aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order

aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels

the intangible capital of a business that includes human capital (well trained and skilled employees) structural capital (databases and information systems) and relational capital (good links with suppliers and customers)

an activity or group of activities that transforms one or more inputs

The ratio of outputs to inputs during production (e.g. output per worker per time period)

the number of units produced during a time period

The process that transforms inputs into outputs

producing output at the highest ratio of output to input

Meeting the objectives of the business by using inputs productively to meet customers needs

Business operations that can be maintained in the long term

involving a high level of labour input compared with capital equipment

involving a high quantity of capital equipment compared with labour input

the production of a one-off item specially designed for the customer

the production of a limited number of identical products - each item in the batch passes through one stage of production before passing on to the next stage

the production of items in a continually moving process

the use of flexible computer-aided technology on production lines to make products that meet individual customers' requirements for customised products

the proportion of maximum output capacity currently being achieved

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

the highest level of sustained output that can be achieved

this exists when the current levels of output are less than the full capacity output of a business; also known as spare capacity.

reducing capacity by closing factories/production units

when demands for a business's products exceeds production capacity

a form of outsourcing that uses specialist contractors to take responsibility for certain business functions