2.3

Question 1

Define production

Answer 1

Combining factors of production to produce goods and services

Question 2

Define productivity

Answer 2

How efficiently resources are being used

Question 3

Formula for labour productivity

Answer 3

Output / number of employees

Question 4

Factors influencing productivity

Answer 4

Capital (machinery)
Humans
Competition
Wages

Question 5

Productivity impacts

Answer 5

Economic growth positively as it:

Increases goods
Cuts costs
High standard of living

Employment negatively as it:

Causes structural u/e

Question 6

Capital intensive

Answer 6

Higher proportion of capital to labour

Question 7

Labour intensive

Answer 7

Higher proportion of labour to machinery

Question 8

Issues with capital intensive

Answer 8

Tools become obsolete
No personal touch
Machine error
Expensive

Question 9

Issues with labour intensive

Answer 9

Skills limited
Cost of training
Absenteeism/turnover 
Human error
L/T more expensive 
Less production output

Question 10

Capacity

Answer 10

The output a firm can produce with given resources

Question 11

Capacity utilisation

Answer 11

What proportion of the theoretical maximum output is actually being created

Question 12

Formula for capacity utilisation

Answer 12

Current output / max possible output x100

Question 13

Under utilisation of capacity : affect on average costs

Answer 13

Ac rise because output is lower and so costs are spread over a lower number of products

Question 14

Over utilisation of capacity: affect on average costs

Answer 14

Higher due to defects and breakages from over working

Question 15

Ways to improve capacity utilisation

Answer 15

Extend product range
Marketing
Rent excess capacity to other businesses

Outsource production
Recruit more workers

Question 16

Define efficiency

Answer 16

Organising production so waste and costs are low

Question 17

What is lean production

Answer 17

A system of production that tries to minimise waste and cut costs at each stage of production

Question 18

Positives of quality

Answer 18

Competitive advantage 
Higher prices
Less waste
Reduced costs
Brand image

Question 19

What’s tqm

Answer 19

Total quality management

Every employee is involved in ensuring quality is high, waste is low.

Question 20

Ads and disads of tqm

Answer 20

Ads: improved products, customer loyalty, competitive advantage, reduced costs

Disads: takes time, money for training, inefficient if everyone isn’t on board

Question 21

Kaizen - what is it

Answer 21

Japanese for continuous improvement

At every stage an improvement can be made

Question 22

What’s jit

Answer 22

Just in time

A stock control system that sees raw materials arrive just in time for manufacture

Question 23

Ads and disads of jit

Answer 23

Ads: no warehouse costs, no perished goods, flexible In a change to demand

Disads: reliability on supplier, no purchasing economies of scale

Question 24

How does lean production cause a competitive advantage

Answer 24

More customer satisfaction –> reduced costs of production —> lower waste

Question 25

What is time based management

Answer 25

Saves time where possible, reduces waiting around and delays

Question 26

What’s a short lead time and the benefits of it?

Answer 26

A short lead time is the time it takes from designing to distribution. A short one is good because:

Reduces costs
Can response to demand
Enter market before competition