Operations Data (AQA A Level Business): Flashcards
Exam code: 7132
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Define employee productivity.
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Define employee productivity.
Employee productivity measures how much output each employee produces over a given time period.
Employee productivity = Output over a time period ÷ Number of employees
A business produces 89,700 units in a year with 35 employees. What is its employee productivity?
Employee productivity is 2,563 units per employee per year. This is calculated as 89,700 ÷ 35.
True or False?
A falling employee productivity figure always means that employees have become less motivated.
False.
A falling figure may reflect declining motivation, but it may also indicate skills gaps, ageing equipment or poor management.
How does automation improve employee productivity?
Automation replaces manual tasks with machinery or technology. This means more output is generated without an increase in staff.
Define unit costs.
Unit costs, also called average costs, are the total cost of producing one single unit of output.
Unit costs = Total costs ÷ Number of units of output
Unit costs typically fall as output increases because ___ costs are spread across more units.
Unit costs typically fall as output increases because fixed costs are spread across more units.
How does renegotiating supplier contracts reduce unit costs?
Securing lower prices for raw materials or components directly reduces variable costs per unit.
Define resource utilisation.
Resource utilisation refers to how efficiently a business uses its available resources, including labour, machinery, equipment and production space.
How is capacity utilisation calculated?
Capacity utilisation is calculated using this formula:
Capacity utilisation = Actual output ÷ Maximum possible output × 100
True or False?
Operating at 100% capacity utilisation leaves a business little or no spare capacity for unexpected orders or machine repairs.
True.
At 100% there is little or no spare capacity for unexpected orders, machine repairs or downtime. A level below full capacity is generally desirable because it leaves flexibility to absorb short-term increases in demand.
Define rationalising.
Rationalising means permanently reducing capacity to match lower demand, for example by closing sites, selling equipment or reducing the workforce.
Define carbon footprint.
A carbon footprint is the total greenhouse gas emissions generated by a business's activities, measured in tonnes of CO₂.
Energy _______ is the amount of energy consumed per unit of output.
Energy intensity is the amount of energy consumed per unit of output.
Why should environmental data that is not independently verified be treated with caution?
The business may be greenwashing, which means making misleading environmental claims.
Define key performance indicator (KPI).
A key performance indicator (KPI) is a measure used by a business to assess how effectively it is achieving its operational objectives.
How can managers use KPI data?
KPIs provide quantitative data that managers use to track performance over time, identify problems and compare against competitors or the industry.
Define wait times.
Wait times measure the amount of time a customer waits before receiving service or before their query begins to be dealt with.
What can cause wait times to rise?
Rising wait times can be caused by understaffing, poorly designed business processes, a surge in demand or the failure of business systems.
A returns rate is the number of returns as a percentage of total ___.
A returns rate is the number of returns as a percentage of total sales.
What might a high returns rate suggest about a business?
It may suggest worsening quality control, poor packaging that causes damage in transit or misleading online product descriptions or images.
True or False?
A 1% defect rate is insignificant for a high-volume manufacturer.
False.
Even a low defect rate can be highly significant in high-volume manufacturing. For example, a 1% defect rate across one million units produces 10,000 faulty products.
How is a business's defect rate expressed?
The defect rate is the number of defective units as a percentage of total units produced or delivered.
True or False?
Many dissatisfied customers do not complain but simply do not return.
True.
A low number of complaints does not prove customers are satisfied. Complaints data should therefore be used alongside satisfaction ratings.
Why are customer complaints a valuable source of improvement data?
Complaints provide direct, specific feedback about where operations is failing.
Define speed of response.
Speed of response measures the time a business takes to respond to a customer query, complaint or request.
What can cause delivery times to rise?
Rising delivery times may be due to supply chain disruptions, insufficient warehouse capacity, picking and packing inefficiency or distribution problems.
In the Net Promoter Score, customers who give a score of 0–6 are known as ________.
In the Net Promoter Score, customers who give a score of 0–6 are known as detractors.
How is the Net Promoter Score (NPS) calculated?
NPS is calculated using this formula:
NPS = % of Promoters − % of Detractors
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