Entrepreneurship Chapter 10 1
Operations Management
Lesson 10.1 Operating Procedures
Goals Define the ___________ functions of management.
Describe ______________ types of policies that should be included in an operations manual. Vocabulary manager management organizational structure authoritative management democratic management operations manual Management Functions manager
the person responsible for ________________, organizing, staffing, implementing and ___________________ the operations of a business
management
the process of _______________________ goals by establishing operating procedures making ___________________ use of people and other resources
Planning
Strategic planning
______________________ for the three to five years ahead setting broad, long-range ___________________________ Intermediate-range planning
____________________ for a one-year period set target dates for task completion
Short-term planning
___________________ for daily operations Organizing
Assignment of tasks
_________________ which employee is responsible for specific tasks Grouping of tasks into departments
__________________ closely related tasks together
a plan that shows how the various jobs in a company relate to one another often __________________ in a chart
Allocation of resources across the organization
determining the most ____________________ use of resources Staffing
Managing the ____________________ needs of a business through: obtaining
__________________ compensating
Implementing
Implementing involves ___________________ and leading people to accomplish the goals of an organization.
management style
Entrepreneurship Chapter 10 2 authoritative management
the manager is ________________________ and controlling democratic management
employees are involved in _______________________ making the manager provides less direction
mixed management
a ____________________________ of authoritative and democratic management Controlling
Controlling is the process of:
setting ___________________________ standards ensuring those standards are met
comparing actual revenues and expenses with projected revenue and expenses _________________ if operations are running effectively
inspecting products and services to ensure they are meeting performance standards
Operations Manual
operations manual
contains all the rules, policies, and _______________ that a business should ___________ to function effectively
employee handbook
details the rules, __________________, and procedures that apply to employees Operating Policies
Set daily ______________________ hours that are convenient for customers. Customer Service Policies
Customer ___________________ is the goal. returns
follow-up ______________ Delivery Policies
often offered for customer _________________________ The policy should cover:
whether you will offer _____________ delivery fee __________________ timeframe Hiring Policies ______________________ process testing requirements _________________________ checks Safety Policies
Entrepreneurship Chapter 10 3
Lesson 10.2 Inventory Management
Goals
__________________ a purchasing plan for inventory. Describe the perpetual and periodic inventory methods. ________________ how much inventory to keep in stock. Vocabulary
perpetual inventory method stock card
point-of-sale software system periodic inventory method stock turnover rate Meet Inventory Needs
inventory
the stock of goods a _________________ has for sale Inventory costs include:
storage
____________________ taxes
purchase price of _________________
_________________________ must be well managed if you want to make a profit. Purchasing Plan
The sales forecast can be used to ____________________ required inventory. Ending inventory =
Beginning inventory + Purchases ─ Sales Track Your Inventory
You will need to take a _______________________ inventory once or twice a year. Perpetual ________________________ Method
perpetual inventory method
monitors __________________ levels daily efficient
avoids ________________ shortages stock card
a paper ____________________________ record for a single item electronic versions available
reorder point
the minimum amount you want to keep in ______________________ indicates when you should place an order to receive more units Use a Computer
point-of-sale (POS) software system
updates ______________________ as each sale happens provides up-to-date ___________________ levels Periodic Inventory Method
taking a physical count of _______________________ at regular intervals Take a Physical ________________________
Entrepreneurship Chapter 10 4 ____________________ the number of items in stock
should be done once or twice a year
can highlight __________________________ caused by a failure to record sales
theft damage Manage Your Inventory
Costs of Carrying ________________________
Costs can increase for many reasons including: obsolescence
_________________________ interest fees
insurance
________________________ Costs of Being Out of Stock
Stock shortages can lead to: loss of _______________ loss of customer loyalty Stock Turnover Rate
the rate at which ______________________ is sold and replaced with new inventory Months of inventory to stock =
Entrepreneurship Chapter 10 5
Lesson 10.3 Financial Management
Goals
Describe strategies for ____________________ cash flow.
Evaluate a business’s performance through financial statement analysis. Vocabulary
cash budget gross sales net sales Manage Your Cash Flow
Create a Cash Budget cash budget
shows the ____________________ of your cash coming in and going out estimated cash flow
actual cash flow
the __________________________ between the two Improve Your Cash Flow
Increase Cash Receipts
__________________ for timely payment tighter credit policies
collect unpaid accounts _____________________ hold shipments to customers with unpaid bills Decrease Cash Disbursements
__________________ reductions reducing the payroll
use _________________ from suppliers reduce variable expenses
Prepare and Analyze Financial Statements
Prepare ______________________ Statements cash flow statement
cash ______________ cash outflows
income statement
____________________ expenses
net income or loss over a specific period or time balance sheet
_________________ liabilities
owner’s equity Analyze Sales
Sales records can:
show ______________________ and patterns be used to forecast future sales
Analyze Sales by Products
helps you decide what type of _________________________ to stock helps you ______________________ sales and profits
Entrepreneurship Chapter 10 6 Analyze Net Profit on Sales
Net profit on sales =
Net income after taxes ÷ Net sales Calculate Net Sales
gross sales
dollar __________________ of all sales net sales =
gross sales ─ returns Calculate Net Income After Taxes
Gross profit =
Net sales ─ Cost of ____________ sold Net _________________ from operations =
Gross profit ─ Operating expenses Net income before taxes=
Net income from ___________________ ─ Interest expense Net income after taxes =
Net income ______________ taxes ─ Income tax paid Calculate and Analyze Net Profit on Sales
Net ____________ on sales =
Net income after taxes ÷ Net sales
Net ______________ helps to determine the profitability of your business. can compare with prior years
can compare against ____________________ standards Set and Meet Profit Goals
Profit goals _________________ the amount of profit you hope to earn during a particular year. Perform Breakeven Analysis
breakeven point
the volume of sales that must be made to _________________ all business expenses Profit occurs after the breakeven point is __________________________.
Analyze Debt and Equity
The ________ key areas entrepreneurs should review using data from the balance sheet are: Ability to _______ debt as it comes due
Return on assets
Amount of _____________ the company is using Rate of return by the owners on their equity investment Ability to Pay Debt
A company is _____________________ if it has enough money to pay off any debt. Current ratio =
Current assets ÷ Current _________________ Return on Assets
ROA indicates how _________________ a company is relative to the total amount of assets invested in the company.
Return on assets = Net income ÷ Total assets Debt Ratio
Entrepreneurship Chapter 10 7 The amount of debt, relative to total _______________, used to finance a business should be
examined. Debt ration =
Total debt ÷ Total assets Return on Equity
The ROE is the rate of return the owners are _______________ on their equity investment. Return on equity =
