Operations Strategy & Planning Flashcards
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Read the first 7 Operations Strategy & Planning flashcards as text
A firm uses a 'level production strategy' in aggregate planning. What is the primary trade-off of this approach?
Answer: Lower hiring costs but higher inventory carrying costs
Level strategy maintains a constant workforce and production rate, which accumulates inventory during low-demand periods and draws it down during peaks.
Which operations strategy decision involves choosing between producing components internally versus purchasing them from suppliers?
Answer: Make-or-buy decision
Make-or-buy analysis weighs the cost, quality, strategic control, and flexibility implications of vertical integration versus outsourcing.
What does a 'capacity cushion' represent in operations planning?
Answer: The buffer between average utilization and 100% capacity
A capacity cushion is the planned reserve above expected demand, providing flexibility to handle unexpected surges without stockouts or delays.
In scenario planning for operations strategy, what is the primary benefit of developing multiple scenarios?
Answer: It prepares the organization to respond effectively to a range of possible futures
Scenario planning builds organizational resilience by preparing contingency strategies for different plausible futures rather than betting on a single forecast.
A manufacturer decides to locate a new facility near its major raw material source rather than near its customer base. This decision prioritizes:
Answer: Input cost minimization and supply reliability
Locating near raw materials reduces inbound transportation costs and ensures supply continuity, especially when materials are heavy, perishable, or costly to ship.
Which of the following best defines 'vertical integration' as an operations strategy?
Answer: Acquiring control over additional stages of the supply chain upstream or downstream
Vertical integration extends a company's ownership into supplier (backward) or distributor/retailer (forward) stages to gain control over quality, cost, and delivery.
In operations strategy, 'focused operations' (or focused factory concept) suggests that:
Answer: Plants perform best when dedicated to a limited set of tasks, products, or markets
Skinner's focused factory concept argues that plants excel when they concentrate on a narrow mission rather than trying to do everything for everyone.