Efficiency (AQA A Level Business): Flashcards
Exam code: 7132
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- FrontWhat is Efficiency?
Define efficiency.
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Cards in this collection (25)
Define efficiency.
Efficiency means producing the maximum possible output from a given set of inputs, or producing a required level of output using the minimum possible resources.
True or False?
Improving efficiency simply means getting employees to work faster.
False.
Efficiency means working smarter, so that resources are used as productively as possible at every stage of the operation.
__ efficiency means completing processes as quickly as possible without reducing quality.
Time efficiency means completing processes as quickly as possible without reducing quality.
What is meant by material efficiency?
Material efficiency means minimising the waste of raw materials and components.
How does efficiency give a business a competitive advantage?
A more efficient business can offer lower prices than rivals or retain a higher profit margin at the same price.
How does efficiency support investment and growth?
Efficient businesses generate more profit from their existing resources. This frees up capital to reinvest in new products, technology or expansion.
Wasted materials, ______ and underused capacity all increase the cost of each unit produced.
Wasted materials, downtime and underused capacity all increase the cost of each unit produced.
What two choices does a business face when inefficiency causes higher unit costs?
The higher costs are either absorbed, which reduces profit, or passed on to customers, which reduces competitiveness.
True or False?
Inefficiency can reduce employee motivation and contribute to higher employee turnover.
True.
Working within poorly designed or wasteful processes is demoralising. It can increase stress, reduce motivation and lead to higher employee turnover.
How does inefficiency create capacity constraints?
An inefficient business produces less than it is theoretically capable of. This limits its ability to meet demand and grow revenue.
How can inefficiency lead to customer dissatisfaction?
Inefficient processes cause delays, errors and inconsistent quality. This leads to complaints, returns and lost customer loyalty.
Why does improving capacity utilisation reduce unit costs?
As capacity utilisation rises, fixed costs are spread across more units, which reduces the unit cost.
True or False?
Running at full capacity carries no risks for a business.
False.
Operating at or near full capacity reduces flexibility and puts pressure on equipment and staff, increasing the risk of breakdowns and quality problems.
Define lean production.
Lean production is an approach to operations management that aims to minimise waste in all forms while maximising value delivered to the customer.
Holding as little inventory as possible by ordering materials only when they are needed is called __________.
Holding as little inventory as possible by ordering materials only when they are needed is called Just-in-Time.
Define Kaizen.
Kaizen is a Japanese term meaning continuous improvement, where all employees at every level constantly look for small, incremental ways to improve their work and processes.
What is the main risk of holding minimal inventory under lean production?
The business becomes highly vulnerable to supply chain disruption, as any delay in deliveries can halt production entirely.
True or False?
Recycling waste materials can generate revenue for a business.
True.
Recycling can generate revenue from materials that would otherwise be thrown away. It also reduces waste removal costs.
How does reusing materials reduce a business's costs?
Using materials, packaging or components again before they become waste reduces the need to purchase new raw materials or components.
Define scheduling.
Scheduling involves planning when and in what sequence production tasks will be completed.
What does Critical Path Analysis (CPA) identify?
CPA identifies the sequence of tasks that determines the minimum time needed to complete a project. Tasks on the critical path cannot be delayed without pushing back the completion date.
Visual timelines that display tasks, their duration and their sequence are known as ___ charts.
Visual timelines that display tasks, their duration and their sequence are known as Gantt charts.
How does job enrichment and empowerment improve employee productivity?
Giving employees greater responsibility and autonomy increases engagement. It also encourages them to find more efficient ways of working.
Define variance analysis.
Variance analysis is comparing actual costs against budgeted costs at regular intervals and investigating significant differences.
True or False?
Cutting costs as deeply as possible always improves a business's performance.
False.
Aggressive cost-cutting can damage quality, employee morale or customer service if cuts go too deep.
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