Starter: Stock Control Key Terms

Slides:



Advertisements
Similar presentations
Introduction to Small Business
Advertisements

Jones & Robinson: Operations Management All operations need to know the likely customer demand for their goods or services on any given day, week or year.
Using Budgets AS Business Studies. Aims & Objectives Aim: Understand variance analysis Objectives: Define variance analysis Explain the causes of variance.
Stock Management Lesson 2.7 – Year 12 Business. 1.Raw materials and components - these are waiting to be used in the production process 2.Work in progress.
Measuring and Increasing Profit AS Business Studies.
2.3 Measuring and Increasing Profit Finance Measuring and Increasing Profit Profit This unit follows on from the study of profits in Unit 1- Calculating.
5.7 Production Planning Chapter 36.
Supply Supply is the quantity of a good that firms are willing to produce at various prices over a particular period of time.
Costs & Break-Even GCSE Business Studies tutor2u™
Stock Control Today you will know what stock control is.
Break Even.
Assumptions for discussion on this topic In our class on National Income we saw that output Y = C + I + G + NX We shall ignore NX. This means we are assuming.
Supply 12th Economics.
EDEXCEL BUSINESS for GCSE © 2009 Ian Marcousé and Naomi Birchall Section 3 Putting a business idea into practice.
Questions Explain whether primary commodities are likely to have a low or high PED. Explain whether manufactured goods are likely to have a low or high.
Productivity and efficiency AS Economics and Business Unit 2b By Mrs Hilton for revisionstation.
Ardavan Asef-Vaziri Systems and Operations Management
1 Ch. 14: Money, Interest Rates, and Exchange Rates.
Economies and diseconomies of scale
IGCSE Economics 4.2 Costs of Production.
Calculating Costs. Costs Aim: Understand what a business costs are. HW: Ch 16 Q. 1 & 2 pg 65 & 67.
S7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Strategies ( process, repetitive, product) The objective of the process strategy.
IB Business and Management Measuring the effectiveness of the Workforce.
4.2 Organisation of Production
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Explain what determines the demand for money and.
4.1.3 How Technology has Changed Production Methods
Unit 4 Accounting and Finance GCE A2 Business Studies.
Aggregate Supply. What is aggregate supply? AS is the total output that all producers in an economy are willing and able to supply at each price level.
4.2.1 A NALYSINGOPERATIONAL PERFORMANCE AQA Business 4 D ECISION MAKING TO IMPROVE OPERATIONAL PERFORMANCE Haribo – numbers and facts How useful are numbers.
Unit 5 Operations Management Location. Learning Objectives To be able to explain the causes and consequences of location and relocation – domestically.
F INANCIAL PERFORMANCE – P ROFITABILITY AQA Business 5 D ECISION MAKING TO IMPROVE FINANCIAL PERFORMANCE Revenue Minus Equals Minus Equals Minus Equals.
Calculating Costs, Revenues and Profit. Today’s session  Identification of fundamental business cost elements  Distinguishing between revenue and profit.
Chapter 23: Making Operational Decisions. Operations Management The process that uses the resources of an organisation to provide the right goods or services.
Unit 4.1 What Are The Key Decisions That Businesses Make?
ECON2: The National Economy
Starter Log on Sit at a desk Give me any homework.
Why is productivity growth so vital? To see more of our products visit our website at Ruth Tarrant, Head of Economics and Politics, Bedales.
 Capacity is the ability of a process or system to hold, receive, store or accommodate.  In business terms, it is the amount of output that a system.
Management of Working Capital. Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific.
Calculating Costs, Revenues and Profits. LEARNING OUTCOMES By the end of the lesson I will be able to: –Define Profit, Revenue and Cost –Calculate Revenue.
BUSS 1 Financial planning: using break- even analysis to make decisions.
AS Revision Exercise Production. 1. Define the following terms; a) repeat purchase b) just in time c) stock 2. Explain the design mix.
Learning objectives To understand how a business can try to increase its profits. To develop exam technique.
242 Capacity Utilisation AS Edexcel New Specification 2015 Business By Mrs Hilton for.
Complete the starter. Learning Objectives Lesson 1: Understand the concept of capacity How capacity is calculated Lesson 2: Over- utilization of Capacity.
Learning Objectives To develop your understanding of Break-even analysis To develop your understanding of Break-even analysis To be able to identify the.
Measuring and Increasing Profit. Unit 1 Reminder – What is Profit? Profit is the reward or return for taking risks & making investments.
Starter Activity  Complete the worksheet provided by your teacher!
BUSS2 Operations: making operational decisions. Making operational decisions Candidates should be able to: Describe operational targets relating to unit.
Aggregate Supply What is aggregate supply? Short run aggregate supply
MGT601 SME MANAGEMENT. Lesson 24 Aspects of Financial Management.
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Explain what determines the demand for money and.
4.2.1 A NALYSINGOPERATIONAL PERFORMANCE AQA Business 4 D ECISION MAKING TO IMPROVE OPERATIONAL PERFORMANCE Haribo – numbers and facts How useful are numbers.
Scale and resource mix Learning Objectives Understand what is meant by productive efficiency Learning Outcomes  Describe the issues involved in choosing.
Capacity Utilisation Defined: The proportion of maximum output capacity currently being achieved Dependent on?  Machinery and equipment  Technology.
Operations Management The process that uses the resources of an organisation to provide the right goods or services for the customer.
Measuring and Increasing Profit
Macroeconomic Equilibrium
Financial forecasting
Perfect Competition: Short Run and Long Run
Capacity Utilisation.
3.4.4 Remuneration How much is Billy worth?
Capacity Utilisation Capacity utilisation measures the output of a firm as a percentage of its maximum output: For example, a school might have the capacity.
3.4.4 Remuneration How much is Billy worth?
What will be happening to income here and why?
4.2 Analysing operational performance
Capacity Utilisation.
Knowledge Organiser Effective Financial Management
Starter - Recap Lesson Objectives:
4.3 Increasing efficiency and productivity
Presentation transcript:

Starter: Stock Control Key Terms Look at the key terms below, define them and then draw and label a stock control chart. Key Term Defined Buffer Stock Stock Rotation Lead Time

Starter: Stock Control Key Terms Look at the key terms below, define them and then draw and label a stock control chart. Stock Levels Time Minimum Stock Level (eg 100 units) Maximum Stock Level (eg 300 units) Re-Order Level (eg 200 units) Jan Feb Mar Apr 100 200 300 Key Term Defined Buffer Stock Stock Rotation Lead Time This is the minimum level of stock a business wants to hold. If stock falls below this level then the firm is in danger of running out of supplies. This is the process of ensuring that the older batches of stock are used first rather than the newer batches, in order to avoid the possibility that the older stocks will become obsolete or go past their sell-by-date. This is often referred to as a First In First Out (F.I.F.O) system This is the time between an order being placed, and the goods being received

Today you will know what is meant by the term capacity utilisation. Thursday, 20 April 2017 Today you will know what is meant by the term capacity utilisation. You will understand the benefits and drawbacks of firms working to full capacity. You will be able to apply this to the case study: Steven Carragher Sportswear

Capacity What is capacity? This is the maximum amount of output that can be achieved over a period of time. The level of capacity a business has will depend on many factors but manly the firms resources such machinery, buildings and labour. A business can change their resources over time and so therefore they can change their capacity.

What is capacity utilisation? Capacity Utilisation – the percentage of a firm’s total possible production level that is being reached. Capacity utilisation is measured using the following formula: Student Task: Work out the capacity utilisation of the room.

Capacity Utilisation Example…. A car business is capable of producing 3,500 cars a month. It is actually producing only 2,800 cars. The capacity utilisation is: 2,800/3,500 = 0.8 x 100 = 80% The business has an extra 20% of capacity it could use each month. That is a possible 700 cars. The different is known as spare capacity. Generally it is felt that between 90% and 100% capacity utilisation is an ideal figure.

Under Utilisation There are a number of reasons why businesses may produce less than the desired maximum capacity level. These include: New competitors or new products entering the market Fall in demand for the product as a whole due to the changes in taste and fashion Unsuccessful marketing Seasonal demand Over-investment in fixed assets A merger or take-over leading to duplication of many resources and sites Under utilisation can benefit a business as it allows for routine maintenance and other machinery checking to take place, staff are usually less stressed too. However low capacity levels can cause unit costs to rise. The business ay have to increase the product price to meet these rising costs. Also staff can become bored and demotivated.

However operating at high levels of capacity has many drawbacks. Over Utilisation Some businesses push production as much as possible, this is usually to meet an increase in demand. They can achieve this by: Increasing the hours of the work force, taking on temporary staff or allowing over time. Subcontract the work to others, this is an effective way of meeting short-term demand. Reallocate workers, this is achieved by making workers flexible and placing them where they are needed. However operating at high levels of capacity has many drawbacks. These include: Poor quality of output and poor customer service Stress and strain on staff and other resources Possible loss of sales

Fixed Costs & Capacity… It is vital to understand clearly the relationship between fixed costs and capacity utilisation. Fixed costs are fixed in relation to output, this means that whether capacity is at 50% or 100%fixed costs will not change. This has implications, the fixed costs can become a huge burden for the business. For example: If a football club invests in a huge expensive player (who's salary will be a fixed cost) but their matches are played to a half empty stadium, the salary will become a burden for the club. A half empty stadium means that the fixed cost per unit are double the level at maximum capacity. When the stadium is at 50% capacity utilisation, then £10 of the ticket price is needed for the players wages alone. The many other fixed and variable costs of running the club would then be on top of the £10. Full Stadium Half-empty Stadium No of fans 50,000 fans 25,000 fans Weekly Salary bill £250,000 Salary fixed cost per fan £5 £10 (£250,000 / 50,000) (£250,000 / 25,000)

The Ideal Level of Capacity Utilisation… The ideal level of capacity utilisation is as near to 100% as possible. This spreads the fixed costs as thinly as possible, boosting profit margins. There are two key concerns about operating at maximum capacity. These are: The risk that demand will rise further, you will have to turn it away, enabling your competitors to benefit. The risk that you will struggle to service machinery and train/retrain staff. This may prove costly in the long term, and will increase the chances of production breakdowns in the short term. The production ideal, therefore, is capacity utilisation of around 90%.

How to improve Capacity… When a business is trying to improve their capacity utilisation they have two options: Increase Demand Cut Capacity Increasing Demand Demand for existing products can be boosted by extra promotional spending, price cutting or even devising a new strategy to reposition the products into growth sectors. The business could also launch new products, this could be highly effective, but implies long term planning and investment. Cutting capacity means reducing the amount that can be produced. This could be achieved by cutting the night shift (i.e. making them redundant) This would avoid the disruption and inflexibility caused by the alternative which is to move to a smaller premises. Moving would enable fixed costs to be cut (rent, rates, salaries etc) However it is important that if a business does move they enable some spare capacity, just encase demand improves.

Plenary Business 1: The Holbury Hotel has just merged with the Hardley Hotel. Thy have increased the number of guest rooms from 190 to 300. Work out their capacity on the following days: Monday: 210 rooms occupied Saturday: 298 rooms occupied Identify the problems they might have on Monday Identify the problems they might have on Saturday

Student Activities… Turn to page 327 of the text book and complete the following activities… Student Task 1: Revision Questions Complete questions 1- 7. Write in FULL sentences at all times (30 marks – 30 minutes) Student Task 2: Case Study: R.Sivyer & Co Read the case study and complete questions 1- 4. (30 marks – 35 minutes)