2.3.1 Using and managing resources to produce goods and services Flashcards
describe job production
involves producing each product indivdually
advantages of job roduction
- higher quality, more time invested in production process
- products can be tailored to meet specific customer needs
- workers will be more motivated as there is variation in job, not repetitive
disadvantages of job production
- cost will be higher because only need supplies for one product,no benefit from economies of scale
- skill/ specialised labour more expensive
describe batch production
set stages that production process needs to go through. one process has to be completed before next stage of production can begin. products similar but can be some variation
advantages of batch production
- needs of different customers met by making different batches of products
- may be possible to use machinery to produce goods which will save costs
- produce larger quantities than in job production
disadvantages of batch production
- tasks become repetitive for workers, poor motivation levels
- often results in build up of significant ‘work in progress’ because a batch is waiting to move onto next stage of production
describe flow production/mass production
continuous movement of items through production process. when 1 task finished next task must start immediately
advantages of flow production/mass production
- cost of production for each unit made low because firm benefits from economies of scale
- improvements in technology mean that not all products need to be same. variation in design can be programmed into computers
- machinery can be used, keep costs low
disadvantages f flow production/mass production
- goods mass-produced and may not be good quality
- large stocks of material have to be kept to keep production line supplied , this expensive
- jobs on assembly line repetitive and boring
describe process production
series of automated processes, which when applied to a variety of raw materials, results in large quantity of a finished product
advantages of process production
- large amounts can be made
- most processes can be auomated, keeps costs low
disadvantages of process production
-expensive to set up an automated process system
describe added value
increased worth that a business creates for a products. the difference between what it costs a business to produce/supply a product and the price that it is able to charge for product/service
describe quality as a method of added value
a product or service that’s of high standard in comparison to those similar products or services that competitors are offering
describe design and formula as method of added value
a product or service may contain features that make it distinctive from other similar ones.
describe convenience as a method of added value
customers will often pay a little more for a product that they can have straight away or which saves them time
describe speed and quality of service as a method of added value
customers may be prepared to pay higher prices for products that can be delivered more quickly
describe branding as a method of added value
when a business creates a distinctive product that stands out from those of its competitors
describe unique selling point (usp) as a method of added value
characteristic that makes product or service different from other similar products being sold in market such as design features
increasing efficiency; JIT
just-in-time, stocks of materials and components not stored but are used immediately when arrive at factory
increasing efficiency; Total Quality Management (TQM)
process where all workers are responsible for quality throughout process of production
define fixed costs
costs that remain the same regardless of output
define variable costs
costs which change when output of business changes
define total costs
total fixed costs + total variable costs
define average costs
total cost / amount sold (assuming all products are sold)
how might a business reduce its average costs
- reduce amount paid for materials and supplies
- reduce wage costs
- increase efficiency of production
- achieve economies of scale
how to calculate break-even
total fixed costs / (selling price - total variable cost per unit)
advantages of break-even for a business
- can set minimum sales targets
- can be useful when trying to get bank loan
- can use to make decision to increase prices
- can use to make decision to reduce costs
limitations of break-even for a business
- forecast figures may turn out different to actual figures
- figures only usually relate to one product,businesses usually sell more than 1 product
- tool assumes all output is sold
how might a business increase revenue
- change price it charges (either increase or decrease)
- increase quantity of goods it sells
when price of product increases or decreases sometimes quantity demand of that product will also change. sometimes, however, demand will remain unchanged. whether quantity demand changes or not depends on ….
- whether or not it’s necessity or luxury
- whether there are many substitutes
- whether product was already very cheap
- whether competitors also change prices
