Matching Output to Demand (AQA A Level Business): Flashcards
Exam code: 7132
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Define production scheduling.
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Define production scheduling.
Production scheduling means planning when and how much to produce, adjusting the timing or volume of production runs as demand changes.
Production scheduling relies on accurate demand _________, as incorrect predictions can still create shortages or surplus.
Production scheduling relies on accurate demand forecasting, as incorrect predictions can still create shortages or surplus.
Define inventory levels.
Inventory levels are the amount of stock a business holds, including raw materials, work in progress or finished goods.
True or False?
Building up inventory to meet higher demand ties up a business's cash.
True.
Money spent on inventory is tied up until the stock is sold. Holding inventory also adds storage costs.
Which forms of employment let a business change the size of its workforce in line with demand?
Part-time, temporary, zero-hours or freelance contracts let a business increase or decrease its workforce flexibly, without a long-term commitment.
Define outsourcing.
Outsourcing means paying another business to carry out an activity, such as production or a specific process, rather than doing it in-house.
Outsourcing lets a business concentrate its resources on its core __________, where it can add value.
Outsourcing lets a business concentrate its resources on its core competencies, where it can add value.
True or False?
Outsourcing gives a business more control over the quality of its output.
False.
Using external providers makes it harder to ensure consistent quality, and handing control to others outside the business may be risky.
Define capital investment.
Capital investment means spending money on machinery, equipment or technology to permanently increase a business's production capacity.
Why can capital investment be risky when matching supply to demand?
It needs significant upfront investment, and if demand growth doesn't continue, expensive capacity is left unused. New equipment can also take time to install and train staff on.
How can a business change its capacity without a permanent expansion?
It can add or remove a shift pattern, change the hours a facility operates, or rent additional space, machinery or equipment temporarily.
What is the difference between undersupply and oversupply?
Undersupply is where demand exceeds supply. Oversupply is where supply exceeds demand.
What are the consequences of undersupply for a business?
Customers who can't be served may buy from a competitor, causing lost sales and revenue, and customer satisfaction and reputation can suffer. There may also be pressure to rush production, which can raise costs or reduce quality.
True or False?
Producing more than customers want is harmless, because the extra stock can always be sold later at full price.
False.
Extra stock may become obsolete or out of date, or have to be sold at a discount, reducing profit margins. Materials, labour and capacity are also wasted.
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