Understanding Operational Management in Business

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| Attempts: 11 | Questions: 24 | Updated: Nov 4, 2025

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1. What is operational management?

Handling employee benefits and payroll.

Dealing with marketing strategies to attract customers.

Managing the IT infrastructure of the company.

Concerned with ensuring the P/S of te company are produced efficiently , on time, to the required quality expected by... Concerned with ensuring the P/S of te company are produced efficiently , on time, to the required quality expected by the customer, and within set budgets.

Overseeing the daily operations of a business to ensure efficiency and effectiveness.

Operational management involves overseeing the processes that create and deliver products/services efficiently, meeting customer expectations and staying within budget constraints.

Explanation

Operational management involves overseeing the processes that create and deliver products/services efficiently, meeting customer expectations and staying within budget constraints.

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About This Quiz

Explore the essentials of Operational Management in A Level Business Studies, focusing on strategies for effective operations. This quiz assesses your understanding of key operational concepts and their application in real-world business scenarios, enhancing your managerial skills and operational efficiency.

2. What first name or nickname would you like us to use?

You may optionally provide this to label your report, leaderboard, or certificate.

2. What are the primary responsibilities of operations managers?

2) Finance - managing budget and financial reports

3) Human Resources - hiring and training employees

1) Assets - materials, plant, machinery, buildings2) Costs - controlling production costs as well as ensuring input stocks and materials... 1) Assets - materials, plant, machinery, buildings2) Costs - controlling production costs as well as ensuring input stocks and materials are also controlled to make sure the business remains profitable.3) People - how many people are required, what are their essential skills, and what are the required productivity levels.Overall these responsibilties focus on decisions covering:- Operational targets- Capacity utilisation- Matching production to demand

1) Marketing - developing promotional strategies

Operations managers focus on assets, costs, and people to make decisions related to operational targets, capacity utilization, and production-demand matching.

Explanation

Operations managers focus on assets, costs, and people to make decisions related to operational targets, capacity utilization, and production-demand matching.

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3. What can cause fluctuations in demand?

Rising inflation rates

- Size of customers orders may vary throughout the year.- Customers may require different delivery times.- Customers making addtional requests... - Size of customers orders may vary throughout the year.- Customers may require different delivery times.- Customers making addtional requests to orders already submitted ( increasing in quantities)

Changes in government regulations

Increased advertising expenditure

Fluctuations in demand are primarily caused by customer behavior and market dynamics such as varying order sizes, delivery requirements, and additional requests. External factors like advertising expenditure, government regulations, and inflation rates may affect demand indirectly but are not the primary drivers of fluctuations.

Explanation

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4. What methods are adopted by operational managers to deal with fluctuations in demand?

Workforce flexibilty - Overtime- Use of P/T, temp or agency staff- Sub-contract some areas of work to outworkersAdvantage is that... Workforce flexibilty - Overtime- Use of P/T, temp or agency staff- Sub-contract some areas of work to outworkersAdvantage is that staff can be deployed as and when needed. Disadvantages are the increase in costs for hiring agaency staff, paying overtime rates, and training costs as well as lower productivity levelsHowever it is better to call in staff when needed than to bear the cost of having staff with little work during slack periods. Stock management- Input buffer stock- Output buffer stock- Just in Time ordering (JIT)The pupose is to have more input materials than is need by current demand to be able to meet an unexpected surge. The same applies to output stock. Maintaining a buffer stock of finished products in storage will help the company meet unexpectedly high demand.The disadvantage is the increase in fixed costs for warehousing buffer stocks. Buffer stocks tie up capital that may not see a return for some time.JIT is a method used universally by retail chain stores, as stock passes through the tills, a record is kept and when it reaches a pre-determined low point it triggers an order to replace stock which then arrive 'just in time'. The advantage is that storage costs are reduced as is the capital tied up in stock. Managing capacity- RationalisationWhen there is a downward trend in demand, an organisation will be left with excess spare capacity. This represents fixed costs burdens that a business may feel it does not wish to bear.Rationalisation is the process of reducing capacity (selling outlets, and reducing staff levels) to match current and foreseeable future demands, while allowing for some spare capacity to meet fluctuations.

Increasing fixed costs, Reducing workforce, Outsourcing production

Operational managers adopt various methods to deal with fluctuations in demand, such as workforce flexibility, stock management, and managing capacity. Increasing fixed costs, reducing workforce, and outsourcing production are not typically recommended strategies for managing fluctuations in demand.

Explanation

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5. What is the meaning of quality?

It refers to the price of a product or service.

It is the quantity of products or services that a business produces.

It is the speed at which a product is delivered to the customer.

It is the expected levels of service and performance that is expected by the customer, and applies not only to... It is the expected levels of service and performance that is expected by the customer, and applies not only to the finished product or service delivered, but also to the business processes that are required to make the product or develop and deliver the service.

Quality is not determined solely by price, speed of delivery, or quantity, but rather by the expected levels of service and performance.

Explanation

Quality is not determined solely by price, speed of delivery, or quantity, but rather by the expected levels of service and performance.

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6. What is quality control?

It is the process of increasing the cost of a product/service to make it seem more valuable.

This is the process of inspecting the P/S to check that it meets the required levels of quality expected by... This is the process of inspecting the P/S to check that it meets the required levels of quality expected by the consumer, and that it is 'fit for purpose'

It is the process of marketing a product/service to attract more customers.

It is the process of randomly selecting products/services to send to customers without inspection

Quality control is an essential process in ensuring that products or services meet certain standards and specifications set by the consumer. This process involves thorough inspection and verification to ensure that the product/service is of high quality and suitable for its intended purpose.

Explanation

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7. What is quality assurance?

Is focused on maximizing profits at the expense of quality.

Is a process of fixing quality issues after they occur.

Involves randomly checking finished products for defects.

Is concerned with preventing business processes producing quality failures. This is achieved by putting in place a set of quality... Is concerned with preventing business processes producing quality failures. This is achieved by putting in place a set of quality standards that are agreed and put in place at all stages of production.

Quality assurance is a proactive approach focused on preventing quality failures rather than reacting to them after they occur. It involves establishing quality standards and processes at all stages of production to ensure consistent quality.

Explanation

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8. What are the 2 key factors associated with quality assurance?

The temperature in the production facility and the humidity levels

The size of the company and number of employees

- The financial case of fewer errors in production and low wastage rates with the risk that some faulty products... - The financial case of fewer errors in production and low wastage rates with the risk that some faulty products may reach customers.- The repuatation of the company with customers - customers are more likely to have confidence in a company that applies recognised quality standards than one that does not!

The color of the product and packaging design

Quality assurance is primarily focused on ensuring the financial benefits of reducing errors and waste, as well as maintaining a positive reputation with customers.

Explanation

Quality assurance is primarily focused on ensuring the financial benefits of reducing errors and waste, as well as maintaining a positive reputation with customers.

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9. What are the systems of quality Assurance?

Lean Manufacturing - A systematic approach to identifying and eliminating waste in operations.

Six Sigma - A data-driven approach for eliminating defects in any process.

Agile Methodology - An iterative and incremental approach to software development.

ISO 9000- European wide standard and to gain this standard, a company must be assessed to show that it:- has... ISO 9000- European wide standard and to gain this standard, a company must be assessed to show that it:- has a set of clear and relevant targets and measures in place.- has a system in place to monitor quality and ensure tragets are being met.- has a system in place that records the range of possible quality failures and procedures that will be used to correct failures. Total Quality Management (TQM) - Focuses on the culture of the business and the emphasis is on everyone in the organisation having some responsibility for quality assurance. It requires a significant investment in training and development of employees to understand their role in maintaining a quality assurance culture in the organisation. The system encourages every employee to identify and feedback quality assurance issues to those who are in a position to correct them.

ISO 9000 and Total Quality Management are two common systems of quality assurance used in businesses. Six Sigma, Agile Methodology, and Lean Manufacturing, while related to quality improvement, are different methodologies with their own principles and practices.

Explanation

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10. Why is quality assurance important for businesses?

D. Quality assurance is only necessary for small businesses, not large corporations.

Some corporate customers will require their suppliers to demonstrate commitment to high levels of quality assurance, and will specify this... Some corporate customers will require their suppliers to demonstrate commitment to high levels of quality assurance, and will specify this requirement in contracts.Meeting the standards required for quality assurance systems means companies receive recognition through accreditation which they can publicise which is very useful when trying to win new business.The added benefit, if a company has a robust quality assurance system in place, it reduces the cost of inspection at the end as it is less likely to produce faulty goods and services.

A. Quality assurance is not important for businesses as it does not impact customer satisfaction.

C. Having a quality assurance system in place increases the likelihood of producing faulty goods and services.

B. Quality assurance only benefits businesses financially and does not contribute to their reputation.

The correct answer explains the importance of quality assurance in terms of meeting customer requirements, gaining accreditation, reducing inspection costs, and winning new business. The incorrect answers fail to address these critical aspects of the role of quality assurance in businesses.

Explanation

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11. What are customer expectations?

- The company's financial history.

- The weather forecast in the area.

- Advice and info prior to and at the time of sale. Potential customers expect to be given info... - Advice and info prior to and at the time of sale. Potential customers expect to be given info about P/S especially when there are a range of options are available (eg several models sold by the company, or equivalent models sold by rival company) A customer will want to gain an understanding of the suitability of the P/S to the customers needs. Never exaggerate the advantages of P/S as long term customers may be disappointed as expectations have been raised but not met.- After sales service - How will the company look after the customer once the P/S has been purchased. Especially important with products that are technically complex or would require specialist help should they fail.

- The color of the product.

Customer expectations revolve around advice and information prior to and at the time of sale, as well as after-sales service. Factors like product color, company financial history, and weather forecast are not typically considered primary customer expectations.

Explanation

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12. What strategies can companies use to meet customer expectations?

Providing generic and unhelpful responses to customer inquiries

Market ResearchIdentifies what customers expect of companies in terms of:- Expected levels of customer service( response times, preferred methods of... Market ResearchIdentifies what customers expect of companies in terms of:- Expected levels of customer service( response times, preferred methods of contact)- What aspects of CS would influence the purchase of P/S( eg quality of info, quality of interaction with the person selling the P/S, the quality of the selling environment)Prioritising the customerSimply putting the customer first. In a competitive market where customers have a wide range of choices between similar products, then decisions to purchase are made on factors other than the product itself, most notably client-relationship management (CRM) and CS. Succesful companies have learned that they are more competitive in such circumstances if they are responsive to their customers and are customer focused rather than simply cost and profit. Infact good CS may allow a premium to be added to the price of the P/S as customers are more willing to pay this knowing they will be treated well.CRM/Customer service trainingStaff who are trained in the skills and knowledge required to work with customers and to develop good relations enhance the reputation of the company and P/S. Large companies invest siginicant financial resources in the development and maintenance of good CS staff.Use of quality standardsSuccessful companies implement standards of service for dealing with customers. These may be developed in house or increasing degree, measure performance against external , independent and impartial quality standards that are widely recognised as representing best practice. Customer First Standard address these standards in the following key areas: Building Customer Relationships; Maximising Market Awareness; Developing your people.What ever standards are used, there purpose is to:- Benchmark the quality of customer interaction against agreed 'best practice' models.- Instil confidence in customers that they will be treated fairly and consistently- Customers will have access to the standards of service delivery so they know what they can expect and how to complain if they are dissatisfied with the service.

Sending random surveys to customers without analyzing the results

Ignoring customer feedback and complaints

Meeting customer expectations involves strategies such as market research to understand customer needs, prioritizing customer service, CRM/customer service training, and using quality standards to benchmark and improve customer interactions. Sending random surveys, ignoring feedback, and providing generic responses are not effective methods of meeting customer expectations.

Explanation

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13. How can companies monitor and improve customer service?

Ignoring customer feedback

Follow up satisfaction surveysIt is an opportunity for a company to gather feedback on its performance and highlight good practice,... Follow up satisfaction surveysIt is an opportunity for a company to gather feedback on its performance and highlight good practice, but also gain an early warning of possible customer-service failings.Focus groupsThese tend to relate to a specific area as they are expensive to set up. However, they are very good at gaining very detailed qualitative evidence. Satisfaction surveys may show an issue , there may not be enough detail in the survey to understand why. By using a focus group and asking them specifically about that issue, the company can gain very detailed insight into the problem.TrackingThis is done in a number of ways, call centres track phone calls made, or sample them, that can be reviewed and the CS journey analysed. Another approach is to take a group of customers and follow them up at intervals over time to assess their satisfaction level over time.

Sending promotional emails

Hiring untrained staff

The correct ways to monitor and improve customer service include follow up satisfaction surveys, focus groups, and tracking. Sending promotional emails, ignoring customer feedback, and hiring untrained staff are not effective strategies for monitoring and improving customer service.

Explanation

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14. How does good customer service affect profitability?

- It is a unique selling point- It enhances brand reputation and the message gets around, personal reccomendations results from... - It is a unique selling point- It enhances brand reputation and the message gets around, personal reccomendations results from it, so good CS is good marketing.- Customers are more likely to come back for more P/S if their first experience with the company is a good one.

Good customer service only benefits the customers, not the company.

It has no impact on profitability.

It decreases profitability due to increased expenses.

Good customer service plays a crucial role in enhancing profitability through various means such as creating a unique selling point, improving brand reputation, encouraging personal recommendations, and increasing customer retention.

Explanation

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15. What are the key factors involved in choosing effective suppliers?

The cheapest option available

Strategic importance of the goods and services.Strategically important supplies are essential to a business and there may be a limited... Strategic importance of the goods and services.Strategically important supplies are essential to a business and there may be a limited number of possible suppliers. Care must be taken in selecting a specific supplier to ensure: continuity of supply, consistency in terms of quality, long term viability of the supplier (are they an economically stable company, can these supplies be sourced elsewhere) examples are electronic components for computers engines for aircraft manufacturing.Non strategically important supplies - are those the business needs , but can be sourced from a number of suppliers and so there is less emphasis on forging strategic alliances and partnerships that demand a considerable investment of management time. Reliability - very important for strategic supplies. Can deliveries be guarnteed?Quality - can consistency of quality be maintained irrespective of the quantity and frequency of supply?Value for money - is the cost bearable within the budget? Also the relationship between the quality and cost, being the cheapest is not neccessarily good value for money if customer complaints increase when cheaper but lower quality products are included in the final product.Nature of supplier relationship - how easy is it to work with the supplier? Are they flexible and responsive (can they respond to short notice demands or increases/decreases supplies as needed, have they got sufficient capacity utilisation.Acceptable terms in a Service Level Agreement (SLA) - is a contract between the supplier and the company that specifies: - standards of service expected and agreed by both parties. - P/S to be supplied , relavant delivery timetables. - Quality thresholds - Terms of payment - Any ethical conditions( no use of child labour if materials are sourced overseas. - Technology compatibility between the IT systems of both parties(especially important for JIT ordering systems) - How disputes will be settled - Conditions governing the termination of the contract.

Number of suppliers available in the market

Supplier's location closest to the business

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16. What are the benefits of good suppliers to the operational performance of the business?

- Quality of supplies has no relation to the final product quality.

- Good suppliers have no impact on customer relations.

- Good customer relations - customers are more likely to show higher levels of satisfaction in the P/S if the... - Good customer relations - customers are more likely to show higher levels of satisfaction in the P/S if the suppliers are able to keep their agreements on quality and reliability of supply. - Fewer delays in production - reliable supplier means the business is less likely to be let down and so suffer shortages that will halt or seriously reduce production levels. - Consistency in quality - the quality of the final product will be largely if not wholly determined by the quality of the supplies. - Flexability - selecting suppliers who have sufficient capacity to respond to non-standard requests resulting from a business's own customers' changing needs increases the flexibility of the business. - Good communications - especially electronic communication - is important in helping a business remain efficient, responsive and flexible. Selecting suppliers with compatible ICT systems benefits both parties.

- Reliable suppliers result in more delays in production.

The incorrect answers provided do not align with the benefits of good suppliers as described in the correct answer.

Explanation

The incorrect answers provided do not align with the benefits of good suppliers as described in the correct answer.

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17. What are the benefits and issues with introducing and updating Technology in a business?

C. Introducing technology in business has no impact on employee resistance or training costs.

Benefits - Generally increases productivity and so reduces unit costs of production over time. - Improves flexibilty - easier to... Benefits - Generally increases productivity and so reduces unit costs of production over time. - Improves flexibilty - easier to manage and plan for unexpected changes. - More consistency in quality - Reduced wastage.Issues - Employee resistance to changes that technology brings ( linked to job security) - Initial investment and ongoing maintenance and updating costs - usually very high and the return on that investment is considered in the overall savings over the life of the technology. - Training costs - employees need to be trained to use the technology. - Potential disruption resulting from the breakdown of the technology

B. Disadvantages of technology in business are related to decrease in productivity and quality.

A. Advantages of technology in business include increased costs and wastage.

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18. What is an operations manager responsible for?

Responsible for managing customer service inquiries

Responsible for making the decisions in conjunction with his/her team, reagrding how business processes are carried out.

Responsible for conducting financial audits

Responsible for overseeing marketing campaigns

An operations manager is responsible for overseeing the operational activities of a business and making decisions on how processes are carried out, not necessarily customer service, marketing, or financial audits.

Explanation

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19. What are the key decisions of operational management?

How many employees should be hired?

- What production methods should be used?- What products should be designed and made? (based on MR)- What are the... - What production methods should be used?- What products should be designed and made? (based on MR)- What are the standards of quality required, and if there are industry quality standard benchmarks, which if any should be adopted?- What plans should be in place to ensure their is sufficient production capacity to meet future customer demand?- What are the requirements for input stock and supplies to make sure there are no delays in production as a result of shortages in supply?

What is the best advertising strategy?

Which competitor should be acquired for market dominance

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20. What are operational targets?

Operational targets are unrelated to the overall performance of a company.

Operational targets refer to the financial goals of a company.

An operations manager is the responsible for the function of the following key ares:ProductivityReliability and efficiency of productionSuppliers and purchasingProduct... An operations manager is the responsible for the function of the following key ares:ProductivityReliability and efficiency of productionSuppliers and purchasingProduct RangeQualityFlexibility of production.Each of these ares is intelinked with one another. This clearly makes operations management a complex set of activites and these are target led.If the targets are related then as an example if a target was to increase productivity by 20% then an operations manager will have implications linked to : - Ensuring suppliers can deliver the raw materials in the quantites needed, at a price that is acceptable, to the quality required and at the time required. - Ensuring the production process is setup to deliver the production targets - ie have sufficient workers and there is sufficient capcacity in the production line (plant and machinery) to cope with the levels needed. - Ensuring the quality of the product is maintained to a high standard, especially in a situation where productionis increased to meet growth in demand.The key target relates to output - essentially source of revenue - and other targets relating to the business processes are then set to ensure the target is met.

Operational targets focus solely on the marketing strategies of a business.

Operational targets are specific goals related to the functioning of a business's operations in areas such as productivity, quality, suppliers, and flexibility. These targets are critical for ensuring the efficiency and effectiveness of production processes.

Explanation

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21. What is capacity utilisation?

Capacity utilisation is the total number of units produced by a machine in a day.

Is the proportion of the max capacity in use by the current level of out put. CU = current output/maximum... Is the proportion of the max capacity in use by the current level of out put. CU = current output/maximum output X 100%

Capacity utilisation is the rate at which a machine can produce goods during a certain period of time.

Capacity utilisation is the cost associated with maintaining a machine in working condition.

Capacity utilisation refers to the actual output of a production process as a percentage of the maximum output it can produce. It is a measure of how much of the available resources are being utilized efficiently.

Explanation

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22. What are the important factors when considering decisions about capacity?

- Operating at 70% capacity is the most efficient way to utilize plant and machinery.

- Operating at 50% capacity provides the most flexibility for a business.

- Operating at a low capacity utilisation is inefficient. The plant, machinery and premise represent fixed costs to the business... - Operating at a low capacity utilisation is inefficient. The plant, machinery and premise represent fixed costs to the business which means that potentially these cost will not going to be covered.- Operating at 100% capacity means it is impossible to take on addtional work at that time without expanding ie investing in new plant, machinery and larger premises. So while 100% appears good at first, the realisation is that there is no flexibilty to deal with an unexpected surge in demand. - Operating at 80-90% capacity allows for a temporary surge in demand, while at the same time ensures the efficient and economical use of plant and machinery. This is linked to the relationship between capacity utilisation and unit cost of production

- Operating at high capacity leads to lower fixed costs.

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23. How do you calculate unit cost of production?

Total cost of production x output

Total cost of production (fixed+variable)/ output If capacity utilisation is 50% then output is 50% max output.

Total cost of production/fixed costs

Total variable costs / output

The correct way to calculate unit cost of production is by dividing the total cost of production (fixed and variable costs) by the output. This takes into account all costs involved in production and gives an accurate measure of the cost per unit.

Explanation

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24. What factors should be considered when accepting non-standard orders for production?

1) What are the addtional costs of manufacturing and supplying the order?- the need to modify machinery or purchase new... 1) What are the addtional costs of manufacturing and supplying the order?- the need to modify machinery or purchase new ones ei are there capital costs that would need recouped?- Addtional labour may be needed with addtional training costs - Opportunity costs presented by diverting managers and other staff in analysing and preparing plans and costing the processes, without any guarntee that the quotation will be accepted.2) It is likely that the costs of developing the manufacturing process to complete the order will result in a signiificantly higher price to the customer than for the standard designs, is it worth it?- Is this an important client, or potiential client, from whom there will be repeat orders of the same product?- Is the demand for this product design likely to increase. If it is innovative and popular, the demand may increase so the company will have some competitive advantage, at least for a while.- Is it possible for the company to negotiate and exclusive manufacturing deal with its customer?

1) What is the standard order process for production? 2) Are there any additional marketing opportunities for the new product... 1) What is the standard order process for production? 2) Are there any additional marketing opportunities for the new product design? 3) What is the current market trend for similar products?

The correct factor to consider when accepting non-standard orders for production involves assessing the additional costs, the impact on pricing, and the potential for exclusive deals with customers.

Explanation

The correct factor to consider when accepting non-standard orders for production involves assessing the additional costs, the impact on pricing, and the potential for exclusive deals with customers.

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