17. Production of goods and services Flashcards
What is the formula for productivity ?
Quantity of output / Quantity of input
Define buffer inventory level
The inventory held to deal with uncertainly in customer demand
Define lean production
Techniques used by business to cut down on waste & therefore increase productivity
What is just in time production?
Method that involves reducing excesses inventories - supplies arrive just as they are needed
What are the 3 types of production?
- Batch
- Flow
- Job
What is job production?
Single product is made at a time
Advantages of job production
- Suitable for personalised products
- Products will meet specific demands
- Workers will have more varies jobs
- Very flexible
- High quality goods
- Higher price can be charged
Disadvantages of job production
- Uses skilled labour
- Costs more money
- Takes a lot of time
- Errors are very expensive
- Specific products may have to be purchased
What is batch production
A quantity of one product is made
Advantages of batch production
- Flexible
- Some variety
- Product will not be greatly affected in machinery breaks down
Disadvantages of batch production
- It can be expensive
- Machines will have to be at rest between batches
- Warehouse space needed = money
What is flow production
Large quantities of a product is being produced continuously
Advantages of flow production
- High output
- Costs are kept low
- Lower prices
- Automated can work 24/7
- Goods are produced quickly
- No transport time
Disadvantages of flow production
- Boring (little job satisfaction)
- Lots of storage space needed
- Capital needed to machinery
- If one machine breaks down everything stops
Factors that affect which method of production to use
- Nature of product (eg. Is it a unique product)
- Size of market
- Nature of demand (eg. How many need to be made?)
- Size of business
