SQA Higher Business Management Management of Operations: a complete overview of inventory, production methods, quality, ethics and technology

What Management of Operations actually demands

Management of Operations is the functional area about turning inputs into outputs efficiently and effectively. The SQA expects you to understand how a firm controls its stock, chooses how to produce, guarantees quality, acts ethically and sustainably, and uses technology. The recurring skill is balanced judgement: holding the right amount of stock, choosing the production method that fits the product, and weighing the cost of quality, ethics and technology against their benefits.

This guide walks through the whole area, then sets out how the SQA examines it. Each topic has a matching dot-point page with practice questions; this overview ties them together.

Inventory and production

Inventory (stock) management is about holding the right amount of stock: overstocking wastes storage and ties up cash, understocking halts production and loses sales, so firms use an inventory control diagram (maximum, minimum, re-order level) and may adopt just-in-time (JIT), which holds almost no stock but depends on reliable suppliers. Methods of production are job (unique, made to order), batch (groups of identical items) and flow (continuous, identical products), and production is labour-intensive (people) or capital-intensive (machinery).

Quality, ethics and technology

Quality matters for reputation, loyalty and cost, and is ensured through quality control (inspecting at the end), quality assurance (building it in at every stage), total quality management (TQM) (a zero-defect, continuous-improvement culture), quality circles, benchmarking and quality standards and symbols. Ethical and environmental operations include ethical sourcing, fair treatment of workers, reducing waste, recycling and cutting pollution, balancing reputation gains against higher short-term costs. Technology runs through it all: automation and robotics, CAD/CAM, EPOS and electronic stock control improve output, quality and information, but cost money and affect jobs.

How Management of Operations is examined

A typical SQA profile for this area:

• Balance the trade-offs. Overstocking versus understocking, job versus flow, the cost versus benefit of quality, ethics and technology.
• Distinguish the methods. Control versus assurance, job versus batch versus flow, CAD versus CAM.
• Discuss both sides. JIT, automation, ethical operations all have clear advantages and disadvantages.
• Apply to the product. The right production method and stock system depend on whether the product is unique or standard, perishable or durable.

Check your knowledge

A mix of recall and explanation questions covering Management of Operations. Attempt them, then check against the solutions.

1. State two costs of holding too much stock. (2 marks)
2. Give one advantage and one disadvantage of just-in-time. (2 marks)
3. Distinguish between batch and flow production. (2 marks)
4. Distinguish between quality control and quality assurance. (2 marks)
5. Name two ethical or environmental practices a firm could adopt. (2 marks)
6. Give one advantage of using automation in production. (1 mark)