WEBVTT 00:00:00.500 --> 00:00:03.955 Welcome to GCSE Edexcel Business revision. 00:00:04.105 --> 00:00:07.682 Unit B U S 8: Making operational decisions. 00:00:10.333 --> 00:00:14.639 Operations organise the production of goods or delivery of services. 00:00:14.789 --> 00:00:20.762 Decisions affect cost, speed, quality, flexibility and the ability to meet customer needs. 00:00:23.433 --> 00:00:28.403 Job production makes one-off or customised products, such as a bespoke cabinet. 00:00:28.553 --> 00:00:33.993 It allows individual requirements but often needs skilled labour and has higher unit costs. 00:00:36.667 --> 00:00:41.413 Batch production makes a group of identical products before switching to another group. 00:00:41.563 --> 00:00:46.895 A bakery can produce several varieties, but changeovers take time and stock may build up. 00:00:49.567 --> 00:00:54.537 Flow production uses a continuous sequence of stages for standardised output. 00:00:54.687 --> 00:01:01.342 High volume can reduce unit costs, but equipment is expensive and disruption at one stage can stop the line. 00:01:04.000 --> 00:01:08.724 Choose a process by demand, customisation, volume, skills and finance. 00:01:08.874 --> 00:01:14.313 High fixed equipment costs are harder to justify when demand is low or unpredictable. 00:01:16.967 --> 00:01:21.885 Productivity measures output per unit of input, such as units per worker per hour. 00:01:22.035 --> 00:01:26.983 Higher output alone does not mean higher productivity if inputs rise by more. 00:01:29.633 --> 00:01:34.189 Worked example: six workers make 240 items in a day. 00:01:34.339 --> 00:01:41.197 Labour productivity equals 240 divided by 6 equals 40 items per worker per day . 00:01:41.347 --> 00:01:45.435 Compare like time periods and consider quality as well as quantity. 00:01:48.100 --> 00:01:53.380 Automation and other technology can improve consistency, speed and productivity. 00:01:53.530 --> 00:01:58.110 Purchasing, maintenance, training and possible breakdown costs must be considered. 00:02:00.767 --> 00:02:06.055 Technology can increase flexibility, such as programmable equipment changing designs. 00:02:06.205 --> 00:02:10.267 It can also make the business dependent on specialist staff or systems. 00:02:12.933 --> 00:02:21.913 Lower unit costs may allow competitive prices or improved profit, but a process that damages quality or customer satisfaction may lose sales. 00:02:24.567 --> 00:02:30.208 Fictional case: a maker of custom wedding cakes may favour job production despite higher costs. 00:02:30.358 --> 00:02:35.829 Flow production might reduce unit cost but fail to provide the designs customers are buying. 00:02:38.500 --> 00:02:42.249 Procurement is obtaining the goods and services the business needs. 00:02:42.399 --> 00:02:48.014 Supplier decisions affect costs, quality, delivery and the final customer's experience. 00:02:50.667 --> 00:02:55.777 Compare price with delivery cost, speed, reliability, availability and quality. 00:02:55.927 --> 00:03:01.933 A cheap supplier can be more expensive overall if late or defective supplies interrupt production. 00:03:04.600 --> 00:03:11.351 Trust and clear communication can support reliable supply, flexible arrangements and resolution of problems. 00:03:11.501 --> 00:03:15.231 Dependence on one supplier also creates risk if it fails. 00:03:17.900 --> 00:03:21.703 Stock includes materials, work in progress and finished products. 00:03:21.853 --> 00:03:28.284 Holding stock can prevent shortages but ties up cash and creates storage, damage and obsolescence costs. 00:03:30.967 --> 00:03:36.469 A bar gate stock graph shows stock falling as it is used, then rising when a delivery arrives. 00:03:36.619 --> 00:03:41.751 The reorder level triggers an order; lead time is the delay between ordering and delivery. 00:03:41.901 --> 00:03:44.394 Stock levels, ordering and lead time 00:03:49.067 --> 00:03:53.442 Buffer stock is a reserve for unexpected demand or supply delays. 00:03:53.592 --> 00:03:59.297 Reorder level must allow for expected use during lead time as well as the desired reserve. 00:04:01.967 --> 00:04:08.302 Just in time (J I T) aims to receive supplies close to when they are needed, minimising held stock. 00:04:08.452 --> 00:04:14.574 It reduces storage and tied-up cash but relies on dependable suppliers and accurate coordination. 00:04:17.233 --> 00:04:22.683 A J I T business is vulnerable to late delivery or sudden demand increases. 00:04:22.833 --> 00:04:29.913 Smaller frequent deliveries can also affect transport costs; J I T does not mean supplies are never physically present. 00:04:32.567 --> 00:04:38.646 Worked example: stock use is 20 units daily, lead time is three days and buffer stock is 40. 00:04:38.796 --> 00:04:46.602 Reorder level equals (20 multiplied by 3) plus 40 equals 100 units , assuming constant use and lead time. 00:04:49.267 --> 00:04:52.154 Logistics coordinates movement and storage. 00:04:52.304 --> 00:05:00.249 Late deliveries or incorrect items can delay customers, increase costs and damage reputation even when the product itself is good. 00:05:02.900 --> 00:05:08.370 Fictional judgement: a restaurant with perishable ingredients may benefit from frequent deliveries, 00:05:08.520 --> 00:05:14.983 but should weigh waste savings against the risk that an unreliable supplier leaves menu items unavailable. 00:05:17.633 --> 00:05:22.395 Quality is the extent to which goods or services meet customer expectations. 00:05:22.545 --> 00:05:29.680 It includes reliability, useful features and service standards, rather than simply using the most expensive inputs. 00:05:32.333 --> 00:05:35.350 Quality control checks output to find defects. 00:05:35.500 --> 00:05:42.101 Inspection can prevent defective products reaching customers, but faults may already have used materials and labour. 00:05:44.767 --> 00:05:51.635 Quality assurance builds quality into processes, for example through training, standards and checks during production. 00:05:51.785 --> 00:05:55.900 It aims to prevent faults rather than rely only on final inspection. 00:05:58.567 --> 00:06:00.956 Businesses can use both approaches. 00:06:01.106 --> 00:06:08.198 Preventing faults and checking results are complementary; quality assurance does not guarantee that no defect ever occurs. 00:06:10.867 --> 00:06:16.777 Poor quality can cause waste, rework, returns, complaints, refunds and lost repeat purchases. 00:06:16.927 --> 00:06:20.806 These costs can exceed the saving from cheaper inputs or less training. 00:06:23.467 --> 00:06:30.964 Consistent quality can create a competitive advantage through reputation, recommendations and reduced failure costs. 00:06:31.114 --> 00:06:35.095 It may allow a higher price when customers value reliability. 00:06:37.767 --> 00:06:40.379 Quality management costs money and time. 00:06:40.529 --> 00:06:47.835 The appropriate standard depends on the customer's needs and the risks of failure, but legal and safety obligations still apply. 00:06:50.500 --> 00:06:56.632 Fictional case: a repair firm uses a checklist and staff training, then tests repaired devices. 00:06:56.782 --> 00:07:03.213 Prevention can reduce repeat repairs while final tests help identify remaining faults before return. 00:07:05.867 --> 00:07:10.411 Product knowledge helps staff explain features, suitability and correct use. 00:07:10.561 --> 00:07:17.184 Accurate advice reduces inappropriate purchases and builds confidence; misleading advice can damage trust. 00:07:19.867 --> 00:07:22.853 Speed and efficiency make purchasing convenient. 00:07:23.003 --> 00:07:29.461 Fast service must still be accurate: rushing can cause mistakes, returns or poor customer experiences. 00:07:32.133 --> 00:07:37.786 Customer engagement involves listening, asking appropriate questions and responding to needs. 00:07:37.936 --> 00:07:42.896 Personal service can differentiate a business, but staffing and training create costs. 00:07:45.567 --> 00:07:48.829 Feedback identifies strengths and recurring problems. 00:07:48.979 --> 00:07:56.232 Responding to complaints and changing processes can prevent repeat failures; simply collecting comments achieves little. 00:07:58.900 --> 00:08:04.722 Post-sales service includes support, installation where relevant, repairs and handling returns. 00:08:04.872 --> 00:08:08.547 Good support can encourage repeat custom and recommendations. 00:08:11.200 --> 00:08:14.875 Customer service affects reputation, sales and loyalty. 00:08:15.025 --> 00:08:22.031 An improvement may increase costs initially, so evaluate both the immediate expense and possible longer-term benefits. 00:08:24.700 --> 00:08:38.714 Fictional chain: a computer shop trains staff to match products to customers leads to buyers choose suitable devices leads to complaints may fall and recommendations rise leads to revenue and avoided return costs may improve profit. 00:08:41.367 --> 00:08:46.193 Judge service improvements by customer expectations and evidence about the problem. 00:08:46.343 --> 00:08:51.579 More staff may not solve complaints caused by defective products or unclear information. 00:08:54.233 --> 00:08:57.007 That completes Making operational decisions. 00:08:57.157 --> 00:09:00.502 Revisit the notes and test yourself on the revision website.