2.2 Managing Business Resources Flashcards
What is production
The action of manufacturing goods using raw materials
Job Production is
Making 1 unique product from start to finish
Factors of job production
-very labour intensive
-requires very skilled workers
-the items stay still and the worker works around it
Benefit of Job production
-specific to customer needs
-can set high prices
-high quality
-motivated workers
Drawbacks/limitations of job production
-expensive
-high wages
-don’t get paid till the end
-takes a long time
-large range of tools may be required
Batch production is
Making batches of similar products
Factors of batch production
-goods are made in batches
-batches can be switched to make something different one the same production line
Benefits of batch production
-can be changed to meet customer needs or fluctuations in demand
-less labour involved
-employees become specialised
-lower skilled workforce, lower payed wage
Drawbacks/limitations of batch production
-sum all batches carry higher average unit costs
-workers less motivated with repetition
-idle time between batches needs to be managed as this is wastage
Flow production
Continues production of identical items
Features of flow production
-large quantities are made
-semi skilled staff used to operate machinery
Benefit of flow production
-can work 24/7
-lower skilled workers, lower wages
-economies of scale (average cost is lower as higher volumes are made)
Drawbacks/limitations of flow production
-expensive automatons
-low motivation
-high labour turnover
-breakdowns and lost production can be costly as this is wastage
What is cell production
The production of items is organised into groups and then teams are set at workstations and see a product through to completion
Benefits of cell production
-employees are motivated
-staff become experts
-cost saving
-efficient (teamwork)
-good quality control
Drawbacks/limitations of cell production
-needs to be well organised
-needs lots of maintenance
-expensive to set up
What is capacity utilisation
is the percentage of maximum possible output that is currently being used.
Why is Capacity utilisation an important concept:
-often used as a measure of productive efficiency
-average production costs tend to fall as output rises- so higher utilisation can reduce costs, making a business more competitive
Positive of working at 100%
-more revenue
-lower unit costs
Negative of working at 100%
-demotivated staff
-can’t maintain machines, can’t clean so machine may break down more easily
-may be hard to meet new and unexpected orders so the business can’t grow unless expanding proaction scale
-staff may see pressure so mistakes and labour turnover
-if overcrowded then less efficient
-have to pay overtime
How can a business operate above capacity
-overtime
-recruit more staff (temporary)
-add swing shift
-suspend maintenance check
-sib-contract same production activity
What is lean production
An approach to management that focusses on cutting out waste, whilst ensuring quality
What is productivity
Is the measure of the efficiency of a person, machine, factory or process of production
Calculate capacity utilisation
Actual output / maximum possible output x 100
Labour productivity calculation
Output (per time period) / Number of employees (per time period)
Capital productivity calculation
Output / Capital employment x 100
What is labour intensive productions
has a lot of staff
what is capital intensive production
-lots of machines
-not a lot of staff
Why does a business need to keep stock
-need a minimum amount of stock (buffer stock)
-never run out of stock
-must order supplies at the right time so that supplies are replenished when tock is getting low (Re-order level)
-need to know how much stock to re-order (Re-order quantity)
-need to know how long our supplies will take to supply our stock when we put in another (lead-time)
Stock control graph
Y axis-stock level
X axis-time in weeks
Maximum stock level
Re-order level
Minimum stock level
Buffer stock
Lead time
What are the consequences of poor stock control
-stock may run out
-if got too much stock it may go bad or lose quality
-potential loss of customers if not enough supply
-storage area
-computer recors
-need staff to manage stock area
-cash tied up in stock
Just in time
Stock delivered where and when you need on the production line
Positives of Just in time
-don’t waist money and space on buffer stock
-don’t have to order it instead
-less wastage
-less capital tied up in stock, therefore reduced average costs of production of each items.
Negatives of just in time
-little room for error
-business may not be able to cope with unexpected increase in demand
-if deliveries are late the firm may need to hault production
-will not gain discounts for bulk purchase
-higher admin costs, as business needs to place orders
Quality is
meeting the needs and experiences of customers
Benefits of good quality
-can charge a higher price
-better reputation
-higher profit
-higher customer retention
-make products easier to place (more likely to stock)
-allows a premium price
-allows brand building and cross marketing
Limitations/Drawbacks of poor quality
-bad reputation
-lower customer retention
-lower profit
-retailers unwilling to stock
-may impact on other products
-may have to price discount
What is quality control
Detecting faulty products at the end of the production line
Advantages to quality control
-filters out bad products
Disadvantages of quality control
-have to hire someone/teams to check
-time-consuming
What is quality assurance
The production is checked at every stage and every worker is responsible for making sure that the product meets a quality standard
Benefits of Quality assurance
-don’t have to hire more staff, workers already do it
-Ensures product is not faulty Stops customer complaints/gives better customer satisfaction
Drawbacks of Quality assurance
-Time consuming to train staff
-Costs a lot of money to train staff
-staff may not like the extra responsibility
What is quality circles
A group/team of employees that meet to solve production problems and suggest improvements
Advantages of Quality circles
-motivates employees
-saves/money
Drawbacks of quality circles
-nees a certain type of management (democrat)
What is Total quality management
Where quality is the most important thing throughout the business and it puts its customers first
Advantages of Total Quality management
-garentees quality
-loyal customers
-builds reputation
Disadvantages of Total Quality management
-expensive
