2.3.1 Using and managing resources to produce goods and services

Question 1

describe job production

Answer 1

involves producing each product indivdually

Question 2

advantages of job roduction

Answer 2

• 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

Question 3

disadvantages of job production

Answer 3

• cost will be higher because only need supplies for one product,no benefit from economies of scale
• skill/ specialised labour more expensive

Question 4

describe batch production

Answer 4

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

Question 5

advantages of batch production

Answer 5

• 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

Question 6

disadvantages of batch production

Answer 6

• 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

Question 7

describe flow production/mass production

Answer 7

continuous movement of items through production process. when 1 task finished next task must start immediately

Question 8

advantages of flow production/mass production

Answer 8

• 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

Question 9

disadvantages f flow production/mass production

Answer 9

• 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

Question 10

describe process production

Answer 10

series of automated processes, which when applied to a variety of raw materials, results in large quantity of a finished product

Question 11

advantages of process production

Answer 11

• large amounts can be made

- most processes can be auomated, keeps costs low

Question 12

disadvantages of process production

Answer 12

-expensive to set up an automated process system

Question 13

describe added value

Answer 13

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

Question 14

describe quality as a method of added value

Answer 14

a product or service that’s of high standard in comparison to those similar products or services that competitors are offering

Question 15

describe design and formula as method of added value

Answer 15

a product or service may contain features that make it distinctive from other similar ones.

Question 16

describe convenience as a method of added value

Answer 16

customers will often pay a little more for a product that they can have straight away or which saves them time

Question 17

describe speed and quality of service as a method of added value

Answer 17

customers may be prepared to pay higher prices for products that can be delivered more quickly

Question 18

describe branding as a method of added value

Answer 18

when a business creates a distinctive product that stands out from those of its competitors

Question 19

describe unique selling point (usp) as a method of added value

Answer 19

characteristic that makes product or service different from other similar products being sold in market such as design features

Question 20

increasing efficiency; JIT

Answer 20

just-in-time, stocks of materials and components not stored but are used immediately when arrive at factory

Question 21

increasing efficiency; Total Quality Management (TQM)

Answer 21

process where all workers are responsible for quality throughout process of production

Question 22

define fixed costs

Answer 22

costs that remain the same regardless of output

Question 23

define variable costs

Answer 23

costs which change when output of business changes

Question 24

define total costs

Answer 24

total fixed costs + total variable costs

Question 25

define average costs

Answer 25

total cost / amount sold (assuming all products are sold)

Question 26

how might a business reduce its average costs

Answer 26

• reduce amount paid for materials and supplies
• reduce wage costs
• increase efficiency of production
• achieve economies of scale

Question 27

how to calculate break-even

Answer 27

total fixed costs / (selling price - total variable cost per unit)

Question 28

advantages of break-even for a business

Answer 28

• 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

Question 29

limitations of break-even for a business

Answer 29

• 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

Question 30

how might a business increase revenue

Answer 30

• change price it charges (either increase or decrease)

- increase quantity of goods it sells

Question 31

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 ….

Answer 31

• whether or not it’s necessity or luxury
• whether there are many substitutes
• whether product was already very cheap
• whether competitors also change prices