Operations Management

What Operations Management covers

Operations Management is examined in all three written papers — the specification is assessed in full on every one of them, and they differ by the context questions are set in rather than by content. It covers operations objectives and operations strategy, added value and how it is measured, innovation and research and development, job, batch, flow and cell production, specialisation and the division of labour, service provision and customer service, project management and Gantt charts, critical path analysis and network diagrams, PERT and the limits of project planning, productivity and how to raise it, economies and diseconomies of scale, capacity utilisation and capacity management, stock control charts and reorder levels, reordering systems and the cost of holding stock, lean production, just in time and kanban, technology in operations, quality control, quality assurance and TQM, external quality standards and benchmarking, choosing a location for a business, logistics and supply chain management, outsourcing, offshoring and re-shoring and external influences on operations.

The 22 subtopics

Each one has its own page.

• Operations objectives and operations strategyRecall questions on the operations function, operations objectives such as cost, quality, speed, flexibility and environmental targets, how they differ from corporate objectives, their value to other functions and employees, conflicts between cost and quality, dependability, and matching an operations strategy to a low-cost market position.Open →
• Added value and how it is measuredRecall questions on added value, the formula for it, how to calculate it per unit and in total, and the ways a business raises it.Open →
• Innovation and research and developmentRecall questions on innovation, research and development, invention against innovation, product and process innovation with self-service checkouts as an example, pure and applied research, the stages of research and development, pharmaceutical spending, patents, the risks of research programmes, and how innovation benefits margins, consumers and the economy.Open →
• Job, batch, flow and cell productionRecall questions on job, batch, flow and cell production, examples such as bespoke tailoring and bakeries, why flow production lowers unit costs, its capital cost and vulnerability to breakdowns and falling demand, cell production and motivation, choosing a method, and mass customisation.Open →
• Specialisation and the division of labourRecall questions on the division of labour and specialisation and how they differ, why dividing labour raises output and cuts training costs, its motivational drawback, vulnerability to absence, job rotation, the effect on quality, benefits to consumers, and the scale of output it needs.Open →
• Service provision and customer serviceRecall questions on services and their location, advance booking, the stages of service provision, the customer's part in production, standardising service quality, customer service, the UK service sector, measuring quality through surveys, mystery shopping, complaints and net promoter scores, the cost of poor service, empowerment, and premium pricing.Open →
• Project management and Gantt chartsRecall questions on project management and why businesses use it, projects against routine operations, Gantt charts, reading bar lengths, finish dates, overlaps and progress, the limitation of Gantt charts, qualitative factors in project success, poor communication, and why network calculations are not enough.Open →
• Critical path analysis and network diagramsRecall questions on critical path analysis and the critical path, earliest start and latest finish times, calculating total float and free float and how they differ, minimum project duration, latest start days, directing resources to critical activities, the risks of adding workers, and the weakness of duration estimates.Open →
• PERT and the limits of project planningRecall questions on PERT, its optimistic, pessimistic and most likely times, the expected time it produces, and what project planning cannot allow for.Open →
• Productivity and how to raise itRecall questions on productivity and production, calculating labour productivity, output per labour hour, percentage productivity change and labour cost per unit, why productivity does not always cut unit costs, raising productivity through automation, training and motivation, new machinery, international competitiveness, and the effects on employees.Open →
• Economies and diseconomies of scaleRecall questions on economies and diseconomies of scale, internal and external economies, purchasing, technical, financial, managerial and marketing economies, calculating the change in average cost as output grows, diseconomies from communication and motivation, external diseconomies such as congestion, and why economies of scale alone do not justify growth.Open →
• Capacity utilisation and capacity managementRecall questions on capacity and capacity utilisation, calculating utilisation, maximum output and fixed cost per unit, why low utilisation raises unit costs, the problems of running at full capacity, capacity management, overtime, extra shifts and subcontracting, seasonal hotels, reducing capacity, and rationalisation.Open →
• Stock control charts and reorder levelsRecall questions on stock control, reading a stock control chart and its sawtooth pattern, buffer stock, reorder levels and lead time, calculating reorder levels, lead times and reorder quantities, maximum stock levels, longer lead times, rising demand, stock-outs, and the cost of excess buffer stock.Open →
• Reordering systems and the cost of holding stockRecall questions on fixed reorder level and fixed time reordering systems and their advantages, the economic order quantity and its formula and calculation, small orders, electronic point-of-sale systems, the costs of holding too much and too little stock, job against flow production, and perishable stock.Open →
• Lean production, just in time and kanbanRecall questions on lean production and the types of waste it removes, just in time production and the conditions it needs, kanban as a pull system, kaizen, the cash flow benefit and supply risk of just in time, time-based management, cell production, a car assembly plant, and workforce resistance.Open →
• Technology in operationsRecall questions on technology in production, computer-aided design, robots on assembly lines, how automation raises fixed costs and makes capacity utilisation more important, 3D printing, technology in retail services and operations information, reliance on technology, effects on employees, and why a small business may not automate.Open →
• Quality control, quality assurance and TQMRecall questions on quality, quality control and quality assurance and how they differ, inspection and its drawback, calculating wastage, defect and yield rates, how lower wastage raises profit, total quality management and the internal customer, the difficulties of introducing it, training, and the benefits of quality to stakeholders.Open →
• External quality standards and benchmarkingRecall questions on external quality standards, ISO, British Standards and the EN prefix, why businesses seek certification and what it costs, why certification does not guarantee a good product, benchmarking, internal, competitive and cross-industry benchmarking, its difficulties, and why it rarely makes a business the market leader.Open →
• Choosing a location for a businessRecall questions on the factors in a location decision, locating near raw materials or customers, skilled labour, government incentives and infrastructure, calculating and comparing site costs, why low-cost sites can cost more, online and high street retailers, a national distribution warehouse, and the effects of location on workers and communities.Open →
• Logistics and supply chain managementRecall questions on logistics, supply chain and distribution management, warehouses, distribution centres and cross-docking, digital systems, choosing transport and sea freight, in-house and third-party logistics, supermarket availability, supplier disruption, single sourcing, and a next-day delivery strategy for an online retailer.Open →
• Outsourcing, offshoring and re-shoringRecall questions on outsourcing, subcontracting, offshoring and re-shoring and how they differ, why businesses outsource support functions, turning fixed costs into variable costs, the risks of outsourcing core activities, reasons for re-shoring, quality problems offshore, effects on home employees, and consumer objections.Open →
• External influences on operationsRecall questions on how social attitudes, health and safety law, consumer protection and ethical sourcing shape operations, together with environmental pressure and circular production, recession, interest rates, a falling exchange rate, border checks on just in time supply chains, technological obsolescence, and adapting operations for international markets.Open →

What you need to know

Answer each one before you reveal it.

Take Operations Management further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Productivity vs Production

  Productivity: output measured against the inputs used to achieve it over a period, such as units per employee. Production: The total quantity of output a business turns out in a period, whatever inputs it took.

• Capacity vs Capacity utilisation

  Capacity: the maximum output a business can achieve in a given period using its current resources. Capacity utilisation: The proportion of the maximum possible output that is actually being produced, expressed as a percentage.

• Added value vs Profit

  Added value: the difference between the price charged for output and the cost of the bought-in goods and services used to make it. Profit: The surplus left once the firm's own costs, such as wages, rent, energy and marketing, have also been deducted from revenue.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is the operations function of a business responsible for?

   Model answer

   Turning inputs such as materials, labour and equipment into the finished goods or services that customers buy.

2. 2

   Define an operations objective.

   Model answer

   A specific, measurable target set for the operations function, such as a cost, quality, speed or flexibility target, to be achieved within a stated period.

3. 3

   Name four operations objectives a manufacturer might set.

   Model answer

   Lowering unit costs, raising quality, shortening delivery times and increasing flexibility of output.

4. 4

   Why does a business express an operations objective as a number rather than as a general aim?

   Model answer

   A numerical target can be compared with actual performance, so managers can tell whether it has been met and hold the department accountable.

5. 5

   How does an operations objective differ from a corporate objective?

   Model answer

   A corporate objective sets the direction of the whole business, while an operations objective is a functional target that supports it by specifying what production must deliver.

6. 6

   How does an environmental target work as an operations objective?

   Model answer

   It commits operations to a measurable cut in waste, emissions or energy use, which then shapes the choice of suppliers, materials and production methods.

What is inside Levo

Six ways to work the same material.

Operations Management revision questions

What does Operations Management cover in OCR A-Level Business (H431)?

22 subtopics: operations objectives and operations strategy, added value and how it is measured, innovation and research and development, job, batch, flow and cell production, specialisation and the division of labour, service provision and customer service, project management and gantt charts, critical path analysis and network diagrams, pert and the limits of project planning, productivity and how to raise it, economies and diseconomies of scale, capacity utilisation and capacity management, stock control charts and reorder levels, reordering systems and the cost of holding stock, lean production, just in time and kanban, technology in operations, quality control, quality assurance and tqm, external quality standards and benchmarking, choosing a location for a business, logistics and supply chain management, outsourcing, offshoring and re-shoring and external influences on operations. Each one has its own page with questions and model answers.

How is Operations Management organised?

By the OCR H431 specification, subtopic by subtopic, so it matches the order you are taught it in.