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Questions and Answers
What are the two terms that are interconnected regarding business operations?
What are the two terms that are interconnected regarding business operations?
Efficiency and waste
What does efficiency look at in a business?
What does efficiency look at in a business?
How well a company can turn its inputs into useful goods and services.
Define waste in the context of business.
Define waste in the context of business.
Any input that is not transformed into goods and services.
Reducing waste can potentially improve efficiency.
Reducing waste can potentially improve efficiency.
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At the heart of operational decision making are considerations of what?
At the heart of operational decision making are considerations of what?
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Efficiency is measured by comparing what two elements?
Efficiency is measured by comparing what two elements?
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What does a company demonstrate when it can produce more output using the same or fewer inputs?
What does a company demonstrate when it can produce more output using the same or fewer inputs?
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Efficiency always reduces costs in a company.
Efficiency always reduces costs in a company.
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What happens to the average cost per unit when more output is produced with the same inputs, or the same output is achieved with fewer inputs?
What happens to the average cost per unit when more output is produced with the same inputs, or the same output is achieved with fewer inputs?
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Which resource input often represents the largest expense for businesses?
Which resource input often represents the largest expense for businesses?
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Labor efficiency can have a significant impact on unit costs.
Labor efficiency can have a significant impact on unit costs.
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What is the effect of more efficiently working staff on the workforce needed and unit production?
What is the effect of more efficiently working staff on the workforce needed and unit production?
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How does the efficiency of a firm's workforce get measured?
How does the efficiency of a firm's workforce get measured?
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What might be a major variable cost in a hotel chain?
What might be a major variable cost in a hotel chain?
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Imagine a hotel chain pays its cleaning staff $12 per hour and it takes 30 minutes to clean a room. What is the average variable cost of cleaning a room?
Imagine a hotel chain pays its cleaning staff $12 per hour and it takes 30 minutes to clean a room. What is the average variable cost of cleaning a room?
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What could be done to reduce cleaning time in the hotel example?
What could be done to reduce cleaning time in the hotel example?
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If cleaning time is reduced to 20 minutes, what will the average variable cost of cleaning a room become?
If cleaning time is reduced to 20 minutes, what will the average variable cost of cleaning a room become?
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Higher labor productivity should reduce average costs and improve profitability.
Higher labor productivity should reduce average costs and improve profitability.
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Firms should always sacrifice quality to achieve a higher output.
Firms should always sacrifice quality to achieve a higher output.
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What can happen when work is rushed or workers are put under too much pressure?
What can happen when work is rushed or workers are put under too much pressure?
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What are two potential outcomes when work is rushed or workers are put under too much pressure?
What are two potential outcomes when work is rushed or workers are put under too much pressure?
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What is essential to ensure that mistakes are minimized?
What is essential to ensure that mistakes are minimized?
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What role does good analysis play in addressing quality issues?
What role does good analysis play in addressing quality issues?
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How is waste defined in relation to the production process?
How is waste defined in relation to the production process?
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Reducing waste increases costs for a business?
Reducing waste increases costs for a business?
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What mnemonic is commonly used to remember the seven types of waste?
What mnemonic is commonly used to remember the seven types of waste?
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What does transportation waste refer to?
What does transportation waste refer to?
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How can excessive stocks result in waste?
How can excessive stocks result in waste?
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What type of waste involves staff risking injury while making the product?
What type of waste involves staff risking injury while making the product?
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What is a cause of waiting waste in the production process?
What is a cause of waiting waste in the production process?
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What does over-processing involve in the production process?
What does over-processing involve in the production process?
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What is a potential consequence of over-production?
What is a potential consequence of over-production?
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What type of waste is associated with finished goods not meeting quality control standards?
What type of waste is associated with finished goods not meeting quality control standards?
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Give an example of how transportation waste might occur in a salon.
Give an example of how transportation waste might occur in a salon.
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How can inventory waste occur in a salon?
How can inventory waste occur in a salon?
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Give an example of motion waste in a salon.
Give an example of motion waste in a salon.
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What type of waste is exemplified when customers have to wait to see their stylist because of over-booking?
What type of waste is exemplified when customers have to wait to see their stylist because of over-booking?
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How can over-processing waste occur in a salon?
How can over-processing waste occur in a salon?
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How can over-production lead to waste in a salon?
How can over-production lead to waste in a salon?
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What type of waste is exemplified by poor quality haircuts that lead to dissatisfied customers?
What type of waste is exemplified by poor quality haircuts that lead to dissatisfied customers?
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Study Notes
Lean Production and Quality Management
- Lean production and quality management are interconnected
- Efficiency focuses on how well a company transforms inputs into valuable goods and services
- Waste is any input that doesn't contribute to finished goods or services
- Reducing waste leads to improved efficiency
Efficiency
- Operational decisions revolve around efficiency, comparing output (produced goods) with input (resources used)
- Higher efficiency means more output from the same or fewer resources, reducing costs
- Higher output with the same input, or the same output with fewer input, results in lower average costs per unit
Labour Productivity
- Labor costs are often the largest expense for many firms.
- Labour efficiency significantly impacts unit costs
- Efficient worker output equates to reduced workforce needs, lower labor costs , and consequently, lower average production costs
Example
- A hotel chain's room cleaning costs are a major variable expense
- If a room cleaning task takes 30 minutes, with staff paid $12/hour, then the average variable cost would be $6
- Training and tools to reduce cleaning time to 20 minutes would lower average costs by $2 per room
Productivity vs. Quality
- Higher labour productivity reduces costs and potentially increases profit
- However, sacrificing quality to achieve higher output may lead to mistakes and faulty products, causing problems like increased waste or faulty products.
- Effective quality control and analysis are keys to minimizing mistakes and understanding issues.
Waste Definition
- Waste comprises any production step that doesn't add value to the end product. Reducing waste reduces costs and improves overall profitability.
Types of Waste (TIMWOOD)
- Transportation: Moving components between workstations or suppliers
- Inventory: Excessive stock levels needing storage
- Motion: Unnecessary or inefficient movements by staff during production
- Waiting: Delays in the production process
- Over-processing: Adding unnecessary features to products
- Over-production: Producing more than needed, leading to inventory issues
- Defects: Products not meeting quality standards
Waste Example (Salon)
- Transportation: Customers travelling between stations for various services
- Inventory: Excess stock of hair products that are seldom needed
- Motion: Staff using malfunctioning equipment
- Waiting: Lengthy wait times due to overbooking
- Over-processing: Offering services customers don't require
- Over-production: Creating excessive amounts of food or drink that goes unused
- Defects: Poor quality haircuts leading to customer dissatisfaction
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Description
This quiz explores the principles of lean production and quality management, highlighting their interconnection. It focuses on efficiency, waste reduction, and labor productivity, emphasizing how these factors contribute to lower production costs. Test your understanding of these concepts and their application in real-world scenarios.
