Page 177 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes Pareto (ABC) Analysis can be used to classify stock groups.
Quality is product’s or service’s nature or feature that reflects capacity to satisfy, express or
imply statement of need (Deming) or quality is product and service characteristics as
offered by design, marketing, manufacturing, maintenance and service that meet customers’
expectations.

Total quality management is a management philosophy that focuses on perpetual
enhancement through the prevention of problems and errors.

Break-even analysis shows the relationship between costs and profits with the sales volume.
11.5 Keywords

Break Even Analysis: An analysis to determine the point at which revenue received equals the
costs associated with receiving the revenue.
Capacity Planning: Capacity planning is the productive capability of a facility.

Demand Forecasting: Forecasting the demand for future will give an idea about the requirements
of the production/operation.
Economic Order Quantity: Economic order quantity is the level of inventory that minimizes the
total inventory holding costs and ordering costs.
Inventory: Inventory is the total amount of goods or materials in a store or factory.
ISO Standards: ISO International Standards ensure that products and services are safe, reliable
and of good quality.
Materials Management: Materials management is part of business logistics and refers to
overseeing the location and movement of physical items or products.
Production: The action of making or manufacturing from components or raw materials, or the
process of being so manufactured.
Quality: A measure of excellence or a state of being free from defects, deficiencies and significant
variations.

Quality Management System: A Quality Management System (QMS) can be expressed as the
organizational structure, procedures, processes and resources needed to implement quality
management.

11.6 Review Questions

1. What are production/operational plans?
2. Discuss the importance of production/operation plan.
3. What is capacity planning and why is it done?

4. Discuss the importance of inventory management in the production plan.
5. Discuss the concept of quality management system in detail.
6. What are the various key decisions that are to be taken in an operational/production
plan?
7. Distinguish between long-term and short-term capacity planning.
8. Discuss Economic Order Quantity (EOQ).

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