Chapter 5: Operations management

Additional school-assessed coursework 1 answers

Outcome 3
Analyse the relationship between business objectives and operations management, and propose
and evaluate strategies to improve the efficiency and effectiveness of business operations.

ASSESSMENT task — case study

1 Explain the following terms:

(a) Global sourcing of inputs
The term ‘global sourcing of inputs’ refers to the practice of seeking the most cost efficient
materials and other inputs, including from countries overseas. Many businesses use global
sourcing to exploit efficiencies that can be gained from the global delivery of products,
including low-cost skilled labour, low-cost raw materials and other economic factors such
as lower taxes and low trade tariffs due to free trade agreements. Global sourcing may
form an integral part of the materials planning strategy of a business.

(b) Quality
Quality refers to the degree of excellence of goods or services and their fitness for a stated
purpose. It basically means that the customer gets what they wanted. A quality product
has a high degree of excellence and achieves the purpose for which it was designed. A
quality product should be reliable, easy to use, durable, well designed, and delivered on
time. It should include after-sales services and have an agreeable appearance. A business
that produces a high quality good or service with quality processes is likely to improve the
efficiency and effectiveness of its operations.

1 mark for a definition and 1 mark for providing further detail for each answer = 4 marks
2 Explain how the operations management area would assist Vittoria Coffee with the
achievement of its business objectives.
Business objectives are the desired goals that a business intends to achieve. They include
making a profit, increasing market share, corporate social responsibility, and customer
satisfaction. Operations management is responsible for the management of resources, the
transformation process and the delivery of finished products. Without a product, the business
would not achieve its objectives.
2 marks

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 Chapter 5: Operations management

3 Describe two differences between the operations of a manufacturing business and the
operations of a service business. Illustrate your answer with examples from Vittoria Coffee or
another business you have studied.
A manufacturer transforms inputs into tangible products. By contrast, a service business
transforms inputs into intangible products. The tangible goods produced by a manufacturer can
be handled and stored before they are sold to the consumer. However, services cannot be
stored. The manufacturing production process and consumption are not linked, so there is little
customer involvement in production. The customer may actually need to be present when a
service is being delivered. In the case of Vittoria Coffee, this is a manufacturing business which
produces a tangible product. Its output can be stored and transported, and will be sold to
consumers through supermarkets or other retail outlets.
2 marks for each difference = 4 marks
4 Outline the key elements of Vittoria Coffee’s operations system.
One key element of the operations management system at Vittoria Coffee is inputs: the
resources that are required to produce goods or services. These include materials (coffee beans,
water, electricity), labour (technicians, equipment operators, and their skills and knowledge),
capital items (equipment, buildings and technology), time, money and information.
Another key element is the transformation process. This involves putting inputs through a series
of procedures in order to transform them into finished products. The transformation process at
Vittoria will involve the coffee beans being roasted (cleaning, roasting, cooling and grinding),
the beans being imbibed with flavours, quality control and packaging.
The final element is output, which refers to generating a finished product. Vittoria Coffee
produces freshly roasted coffee beans, packaged ready for distribution to the eventual
consumers.
1 mark for defining each key element and 1 mark for providing examples relevant to Vittoria for each
element = 6 marks
5 Explain what waste minimisation is and how could it be performed by Vittoria Coffee.
Waste minimisation is a process involving the reduction of the amount of unwanted or
unusable resources produced by a business in an attempt to improve the efficiency and
effectiveness of operations. Minimising waste reduces the costs of production of the business,
such as the costs of waste removal, and also improves productivity across the operations area.
Furthermore, minimising waste demonstrates concern for the natural environment; this can
contribute to improving the reputation of the business.
Waste minimisation could be performed by Vittoria Coffee by redesigning products and
packaging, procuring materials made from recycled materials, reusing scrap material, improving
quality control, exchanging waste with other businesses, or introducing all systems approaches,
such as lean production.
2 marks for explaining what waste minimisation is, 2 marks for explaining how waste minimisation
could be performed by Vittoria Coffee = 4 marks
6 Outline and discuss the use of a technological development strategy at Vittoria Coffee.
A technological development strategy could include office technology, CRM (customer
relationship management), use of automated production lines, computer-aided design,
computer-aided manufacturing techniques, website development, or a combination of these.
An appropriate strategy for Vittoria Coffee is an automated production line – this is comprised
of machinery and equipment arranged in a sequence with components added to the good as it
proceeds through each step, with the process controlled by computers. Vittoria Coffee might
make use of robotics on its automated production line that would perform complex tasks and
menial tasks.

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The automated production line strategy would have certain advantages and disadvantages. For
example, the use of an automated production line will allow for a high degree of precision and
accuracy that is generally not achievable by humans. The robots on the production line will
work without complaint and will not make demands for higher wages. On the other hand, the
use of an automated production line is very expensive and is also prone to breaking down.
1 mark for outlining an appropriate technology strategy, 2 marks for outlining the advantages of the
strategy and 2 marks for outlining the disadvantages of the strategy = 5 marks
7 Recommend and explain a materials management strategy that could be implemented to
improve the efficiency and effectiveness of Vittoria Coffee’s operations. Justify your answer.
Students could choose a materials management strategy such as forecasting, master production
schedule, materials requirement planning or just in time. Just in time is a materials
management strategy that Vittoria Coffee could implement to improve the efficiency and
effectiveness of its operations. This strategy makes sure that the right amount of materials
arrives in the operations process just as they are needed for production. Supplier deliveries
must be reliable and materials need to be delivered at the appropriate time. By using this
strategy, Vittoria can reduce its storage costs and reduce the risk of waste occurring in storage.
By reducing costs and waste, Vittoria can improve the efficiency and effectiveness of its
operations.
1 mark for a recommendation, 2 marks for a description of an appropriate materials management
strategy and 2 marks for justifying why the strategy would improve the efficiency and effectiveness
of Vittoria Coffee’s operations = 5 marks
8 Vittoria Coffee uses quality control to make sure that its coffee meets customer expectations.
Explain the difference between quality control and quality assurance and suggest the impact of
each strategy on the level of Vittoria Coffee’s efficiency and effectiveness.
Quality control involves the use of inspections at various points in the production process to
check for problems and defects. Specifications or standards are set before the physical checks
are completed. Actual performance is then compared to the established criteria. By contrast,
quality assurance involves the use of a system that ensures that a business such as Vittoria
Coffee achieves set standards in production. Many businesses are certified to ISO 9000
standards. Customers who see that a business meets quality standards will be more likely to
purchase their products.
The use of quality control will improve efficiency and effectiveness through the reduction of
faults. This will reduce waste and costs, and will make Vittoria Coffee more competitive.
Customers who see that a business meets a quality standard through the use of quality
assurance will be more likely to purchase their products. In this way, Vittoria Coffee will become
more effective and efficient.
2 marks for explaining the difference between quality control and quality assurance and 1 mark for
each suggestion on how the strategy impacts on the level of Vittoria Coffee’s efficiency and
effectiveness = 4 marks
9 Analyse two corporate social responsibility issues that would concern the operations area at
Vittoria Coffee.

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Corporate social responsibility issues associated with the operations function at Vittoria Coffee
include managing inputs appropriately, managing suppliers appropriately, managing staff
appropriately and managing the customer relationship appropriately.
Vittoria Coffee will need to manage inputs appropriately by attempting to use inputs that do not
have a serious impact on the environment. Vittoria's Rainforest Alliance certification shows
their concern for the environment. The inputs used in its production process also create waste.
In the desire to keep down the costs of production, Vittoria should not be tempted to use
cheaper, illegal waste disposal methods.
Vittoria will need to manage suppliers appropriately. The business would work with suppliers to
ensure that they follow guidelines on ethical and socially responsible behaviour. Vittoria should
not deal with suppliers who use child labour to harvest coffee beans. It is also not appropriate
for businesses to provide preferential treatment to suppliers that offer gifts such as free meals,
trips or entertainment, or to select suppliers based on personal friendships.
Generally, the impact of corporate social responsibility on operations will be to increase costs.
Time and energy will also need to be used to introduce socially responsible policies. Overall
though, a socially responsible business is more likely to be competitive as it improves its
reputation.
1 mark for identifying each corporate social responsibility issue and 2 marks for each analysis of the
issues, based on a precise explanation of how the issue will affect operations and why = 6 marks

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