Business: Dimension and Unit Cost Essay

Submitted By lyy211
Words: 584
Pages: 3

To understand the different types of operation we differentiate between them by using four dimensions - it calls these the four V's of operations. They are,
Volume - how many products or services are made by the operation?
Variety - how many different types of products or services are made by the operation?
Variation - how much does the level of demand change over time?
Visibility - how much of the operation's internal working are 'exposed' to its customers?
In most industries one can find examples at either end of each dimension. So, for example, in transport, a taxi service is low volume while a bus service or mass rapid transport is high volume. In accounting firms, corporate tax advice is high variety because all large corporations have different needs, while financial audits, which have to be carried out to comply with financial reporting legislation, are relatively standardized. In food manufacture, the demand for ice-cream varies considerably depending on the weather, while the demand for bread is far steadier and more predictable. In the dental care industry, dentists operate high visibility operations (it's difficult to work on your teeth if you are not there) but rely on dental technicians in factory-type laboratories to make false teeth etc. These dimensions are most useful in predicting how easy it is for an operation to operate at low cost.
Volume dimension:
The volume dimension has different implications whether it is in a high level or low. In the low levels of volume, the company's operations have specific characteristics such as having low repetition in the everyday procedures, each staff member performs more than one job in other words they are multifunctional, less systemization and high unit costs. In the high levels of volume, the company's operations have its own specific characteristics such having high repeatability in the everyday procedures, there will be specialization, systemization, more capital intensive and low unit costs.
Variety dimension:
The variety dimension has its own implication as well whether it is high or low. In the high side of the scale there will be more flexibility in the procedure, complex, the company will make sure to match customer needs and of course the unit cost will be high. In the other hand, when