7115 · 4.1
Production of goods and services flashcards
Revision flashcards for Cambridge 7115 Production of goods and services (syllabus 4.1). Flip, recall, then mark a real past-paper question.
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Inputs in operations?
Materials, labour, capital equipment, energy, knowledge.
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Transformation process?
Activities that convert inputs to outputs — physical or intangible.
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Value added formula?
Output value − cost of materials/components bought in.
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Service example?
Restaurant: food + chef skill + venue → meal experience.
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Why value added matters?
Covers wages, overheads, profit — core to gross profit.
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Link to 10.1 accounts?
Value added relates to revenue minus direct material costs.
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Operations vs marketing?
Ops creates product; marketing creates demand.
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Waste in process?
Reduces value added — lean ops (9.3) targets this.
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What are the four main categories of inputs in the transformation process?
Land (natural resources), Labour (human effort), Capital (man-made resources and finance), and Enterprise (organisation and risk-taking).
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Define the 'transformation process'.
The sequence of activities and operations that converts inputs (resources) into outputs (goods or services), with the primary aim of adding value.
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What is 'value added' in an operational context?
The difference between the selling price of the finished product/service and the cost of the bought-in materials and components used to produce it. It is the wealth created by the business.
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Give an example of a transformation process in a service business.
In a university, inputs (lecturers, books, students, buildings) are transformed through teaching and research into outputs (graduates with qualifications, new knowledge).
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How does the tangibility of outputs differ between manufacturing and service operations?
Manufacturing outputs are tangible goods (e.g., a car) that can be stored and owned, whilst service outputs are intangible experiences (e.g., a flight) that are consumed immediately and cannot be stored.