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business > 2.4 > Flashcards

2.4 Flashcards

1
Q

what is production?

A

the transformation of resources into finished goods or services

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2
Q

Assessing the Methods of Production : Job production

Explanation

A

Manufacturers produce one product at a time as ordered by the customer

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3
Q

Assessing the Methods of Production : Job production

advantages

A
  • High quality product
  • Motivated and highly skilled workers
  • Customised products can be produced
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4
Q

Assessing the Methods of Production : Job production

disadvantages

A

Production is slow
Labour costs are high

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5
Q

Assessing the Methods of Production: Flow production

explanation

A

Continuous manufacturing of standardised products, usually on a production line

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6
Q

Assessing the Methods of Production: Flow production

advantages

A

Low unit costs due to economies of scale
Rapid production
Usually highly automated (capital intensive)

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7
Q

Assessing the Methods of Production: Flow production

disadvantages

A

Customisation is difficult
Capital equipment can be expensive to purchase

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8
Q

Assessing the Methods of Production: batch production

explanation

A

Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins

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9
Q

Assessing the Methods of Production: batch production

advantages

A

Workers can specialise
Production can take place as the previous ‘batch’ starts running out

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10
Q

Assessing the Methods of Production: batch production

disadvantages

A

Requires careful coordination to avoid shortages
Money is tied up in stock as completed products need to be stored

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11
Q

Assessing the Methods of Production: Cell production

explanation

A

This involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process

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12
Q

Assessing the Methods of Production: Cell production

advantages

A
  • Cell production is often more efficient than other methods as workers share their skills and expertise
  • Motivation is usually high as employees work as a team
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13
Q

Assessing the Methods of Production: Cell production

disadvantages

A
  • Requires extensive reorganisation of production processes
  • Teams efficiency may be reduced by weaker workers
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14
Q

what is productivity?

A

Productivity is the output per input (person or machine) per hour

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15
Q

what is the labour productivity

A

The labour productivity of a business is measure of the output per worker during a specified period of time

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16
Q

what is the formula for labour productivity?

A

output /number of workers

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17
Q

what is capital productivity?

A

Capital productivity is a measure of the output of capital employed (e.g. machinery) during a specified period of time

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18
Q

capital productivity formula

A

output / number of machines

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19
Q

what happens to the business cost when productivity increases?

A

business cost decreases

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20
Q

Factors that Influence Productivity explanation

employee motivation

A
  • Motivated workers tend to be more productive
  • Financial incentives linked to output may increase worker productivity
  • Non-financial incentives may include workers in decision-making, increase their commitment and productivity
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21
Q

Factors that Influence Productivity explanation

Skills, education & training staff

A
  • Well-trained and educated workers are likely to be able to make useful contributions to decisions that improve productivity
  • Workers are more autonomous so the need for supervision is reduced
  • Contributions from knowledgeable staff are likely to lead to improvements in productivity
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22
Q

Factors that Influence Productivity explanation

Business organisation & working practices

A
  • Flexible and adaptable workplaces can improve the commitment of workers and allow a business to respond to changes in demand
  • Hours and location of work can be adapted to better meet the needs of workers and demand
  • Workstations may be used for various purposes with careful planning and training
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23
Q

Factors that Influence Productivity explanation

Investment in capital equipment

A
  • Increased automation can improve levels of output and quality
  • Well chosen machinery is less likely to make mistakes than humans
  • Machinery and technology can operate for long periods without a break as long as it is properly maintained
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24
Q

what is competitiveness?

A

Competitiveness refers to the ability of a business to maintain or grow its sales and market share given the presence and actions of rivals

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25
Q

what is efficiency

A
  • Efficiency refers to the ability of a business to use its production resources as cost-effectively as possible
  • Efficiency is often measured in terms of the average cost per unit
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26
Q

efficiency formula

A

total costs/number of units

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27
Q

when is maximum efficiency achieved?

A
  • when the cost per unit is at its lowest
  • Economies of scale are maximised
  • Total costs are spread across an optimum level of output
  • Diseconomies of scale are minimised
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28
Q

The Factors that can Influence Business Efficiency : explanations

Standardisation of the production process

A

Occurs when all staff use the same components and techniques in the production process
Training of workers is minimised
Bulk-buying of components reduces variable costs
Production lead time is reduced
BUT customisation of products is not usually possible

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29
Q

The Factors that can Influence Business Efficiency : explanations

Relocation or downsizing

A
  • Moving production to a cheaper or smaller location can reduce fixed costs
  • Labour-intensive businesses may look for lower wage locations
  • Capital-intensive locations may look for lower rents or land costs
    -However, relocation is very disruptive and will incur significant short-term costs
30
Q

The Factors that can Influence Business Efficiency : explanations

Investment in capital equipment

A

Purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality

31
Q

The Factors that can Influence Business Efficiency : explanations

Organisational restructuring

A
  • Delayering reduces labour costs as levels of management are removed
  • Redeployment can motivate workers by providing opportunities for staff to take on a new role which will develop their skills and experience
32
Q

The Factors that can Influence Business Efficiency : explanations

outsourcing

A
  • Tasks may be given to other specialist businesses that can complete it at a lower cost
  • Outsourcing allows a business to focus on improving the efficiency of its core competences
33
Q

The Factors that can Influence Business Efficiency : explanations

Adoption of lean production techniques

A

An approach to production that involves the reduction of all types of wastage (time, resources and space)
Kaizen means that improvements are made continuously
Just in Time involves the holding little or no stock which minimises storage costs

34
Q

pros of kaizen

A

Continuous Improvement: Kaizen encourages making small, gradual changes over time. This helps in steadily improving processes, products, or services.

Employee Involvement: It involves everyone in the organization in identifying problems and finding solutions. This boosts morale and teamwork.

Cost Reduction: By finding and fixing problems early, it can save money in the long run by preventing bigger issues from arising.

35
Q

cons of kaizen

A

Time-Consuming: Implementing Kaizen requires time and effort, which can slow down regular work activities initially.

Resistance to Change: Some employees may resist changes to their routine or methods, which can make implementing Kaizen difficult.

36
Q

cons of just in time

A

Bulk buying **economies of scale are not generally possible
**
The ability to respond to unexpected increases in demand is reduced

Administrative costs related to frequent ordering are increased

Unreliable suppliers (e.g. late or poor quality deliveries) can quickly halt production

Significant changes to organisational structure and production controls are required

37
Q

pros of just in time

A

Stockholding costs including storage costs are minimised

Cash flow is improved as money is not tied up in stocks

Unused storage space is available for productive use

Teamwork is encouraged so employee motivation is likely to be improved

38
Q

what is labour intensive production?

A
  • Labour-intensive production predominantly uses physical labour in the production of goods/services
  • The delivery of services is usually more labour-intensive than manufacturing
  • In countries where labour costs are low (e.g. Bangladesh) labour-intensive production is common
    Small-scale production is likely to be labour-intensive
39
Q

what are capital intensive production

A

Capital-intensive production predominately uses machinery and technology in the production of goods/services
Large-scale production of standardised products is likely to be capital-intensive
Manufacturing in developed countries where labour costs are relatively high is likely to be capital intensive

40
Q

The Advantages & Disadvantages of Labour Intensive

capital Intensive Advantages

A
  • Low-cost production where output is high
  • Machines are usually consistent and precise
  • Machines can run without breaks
41
Q

The Advantages & Disadvantages of Labour Intensive

Capital Intensive Disadvantages

A
  • Significant set-up and** maintenance costs**
  • Breakdowns can severely delay production
  • May not provide flexibility in production
42
Q

The Advantages & Disadvantages of Labour Intensive

Labour Intensive advantages

A
  • Low-cost production where labour costs are low
  • Provides opportunities for workers to be creative
  • Workers are flexible (e.g. they can be retrained)
43
Q

The Advantages & Disadvantages of Labour Intensive

labour intensive disadvantages

A
  • Workers may be unreliable and need regular breaks
  • Incentives may be needed to motivate staff
  • Training costs can be significant
44
Q

what is capacity utilisation

A

the measure of the level to which a business assets are being used to produce output

It compares current output to the maximum possible output

45
Q

capacity utilisation formula

A

(current output / maximum possible output) x 100

46
Q

cons of under utilisation

A
  • if a business has a low level of capacity utilisation it will not be making the most of its resources and is likely to have increased unit costs
  • Workers may be under-deployed leading to fears of redundancy
    -** Decreased Productivity:** When resources are underutilized, productivity may suffer as employees or equipment are not fully engaged, leading to inefficiencies and lower output.
47
Q

pros of under-utilisation

A
  • Flexibility: It can provide flexibility in managing resources, allowing the business to scale up or down more easily in response to changes in demand or market conditions.

-The business can respond to sudden increases in demand

48
Q

pros of utilisation?

A

minimise average total costs and increase business competitiveness

If workers are busy they are likely to feel secure in their employment

A business that is busy is likely to be well thought-of and is likely to attract customers who are willing to wait for products to be delivered

49
Q

ways to improve Capacity utilisation:

outsourcing

A

+ business can increase level of output
- profit margin may reduce

50
Q

ways to improve Capacity utilisation:

reduce capacity

A
  • sell fixed assets or reduce staffing to reduce capacity
  • flexibility may be necessary to respont to increased demand
51
Q
A
52
Q

ways to improve Capacity utilisation:

increase sales

A
  • increase sales
  • promotional stuff may be needed and that costs money
53
Q

what is buffer stock

A
  • a quantity of goods/raw materials kept in case of stock shortages
  • This can provide a competitive edge over rivals unable to meet demand
  • This approach is commonly called ‘just in case’ stock control
54
Q

advantages of holding buffer stock

A

Stability in supply
Buffer stocks ensure a stable supply of goods which is able to respond to unexpected customer demand

Raw materials security
Businesses that are dependent on particular raw materials avoid disruption to their supply

Competitive advantage
By having a reliable supply of goods businesses can gain a reputation for always being able to meet the needs of their customers

55
Q

disadvantages to buffer stock

A

Cost
Holding buffer stocks can be expensive, as it requires storage facilities and inventory management systems

Risk of obsolescence
Buffer stocks can become obsolete if the demand for a particular product or input declines

Opportunity cost
Holding buffer stocks ties up capital that could be invested in other areas of the business

56
Q

what is lean production

A

involves the minimisation of the resources used in production

57
Q

Pros of lean production

A

Less time is required as the production process is organised in the most efficient way

Less labour is used as lean production is typically capital intensive

Lower unit costs are achieved due to minimal wastage so prices may be lower than those offered by competitors

Better quality of output is likely as a result of supplier reliability and carefully managed production processes

58
Q

Methods of Quality Control : Quality Control

explanation

A

Inspecting the quality of output at the end of the production process

59
Q

Methods of Quality Control : Quality Control

benefits

A

Quality specialists are employed to check standards

An inexpensive and simple way to check that output is fit for purpose

60
Q

Methods of Quality Control : Quality Control

drawbacks

A

The rejection of finished goods is a significant **waste of resources **

There is little focus on the cause of defects

61
Q

Methods of Quality Control: Quality assurance

explanation

A

Inspecting the quality of production throughout the process

62
Q

Methods of Quality Control: quality assurance

benefit

A

Quality issues are identified early so products may be reworked rather than rejected

The cause of defects is the focus so future quality issues may be prevented

63
Q

Methods of Quality Control: quality assurance

drawbacks

A

Staff training and a skilled workforce is required so labour costs may be increased

Reworking may lengthen the production process

64
Q

Methods of Quality Control: Quality Circles

explanation

A

Groups of workers meet regularly to solve quality problems identified in the production process

65
Q

Methods of Quality Control: Quality Circles

benefits

A
  • workers may be motivated as they are involved in decision making
  • Relevant and focused solutions are likely as workers are familiar with processes
66
Q

Methods of Quality Control: Quality Circles

drawbacks

A
  • management need to have trust in the workers
  • meetings and structures must be organised regularly
67
Q

Methods of Quality Control: Total Quality Management (TQM)

explanation

A

Organisation of the business with quality at its core and with every worker responsible for quality

68
Q

Methods of Quality Control: Total Quality Management (TQM)

benefits

A

Quality in all aspects of the business improves efficiency

A culture of constant improvement exists within the business

69
Q

Methods of Quality Control: Total Quality Management (TQM)

drawbacks

A

All workers must be committed and receive significant continued training

Careful monitoring and control is required

70
Q

what are the competitive advantages of quality management?

A

Unit costs are likely to be low if a business takes a preventative approach through the use of quality assurance or TQM

Low costs may allow a business to reduce its selling price to better compete with or undercut its rivals

business (18 decks)

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