2.4-managing resources

Question 1

what is production?

Answer 1

combining inputs, raw materials and compoents to create an oitput of products and srevices

Question 2

What is job production?

Answer 2

a one off product created by skilled workers, tailored to customer needs
+ve
charge a higher price
more customer satisfaction as it meets their needs
more motivated employees as they have more interesting work
-ve
higher labour costs- skilled employees demand a higher pay
cant benefit from economies of scale
customers may not be willing to pay high price

Question 3

What is batch production?

Answer 3

where you split the production into stages and make small batches of different products
+ve
more cost effective than job as you benefit from economies of scale
change products to meet customer needs
respond to a change in demand quicker
-ve
time consuming to change and clean equipment between each batch
cost implication of having to store raw materials
workers may be less motivated as repetitive

Question 4

What is flow production?

Answer 4

the continuous movement along a production line
+ve
lower unit cost
more efficient and less need for human labour- all automated
workers more productive as do same job repetitively
-ve
high start up cost and breakdown costs for machinery
if a machine breaks down it can stop the whole production
workers may be less motivated as its repetitive’
not flexible- only make one product which is standardised

Question 5

what is cell production?

Answer 5

where workers are split up into groups to tackle each stage of the production process
+ve
more motivated as have a large variety of tasks so less bored
more likely to take ownership of their cell which increases quality
-ve
can increase costs as workers need training to be multi-skilled
can be potential conflicts

Question 6

What is productivity?

Answer 6

how effectively resources are being used
output per worker
————————–
time

Question 7

what is productively efficient

Answer 7

efficiency is reached when costs are minimised

Question 8

factors influencing productivity

Answer 8

1- specialisation - if you are an expert in an area, you get better and faster and make less mistakes
2-education and training- gain more knowledge to make improvements and new ideas
3-motivation - increases speed and quality
4-good working practices- employees feel safe and secure
5- labour flexibility- the ability to adapt to market conditions
6- capital productivity- if there are good fixed assets , less likely to break down so become more productive
7-efficiency
how production is organised to make best use of resources, and use minimum inputs

Question 9

link between productivity and competitiveness

Answer 9

if a business is more productive, they can produce more output with same level of input- this reduces costs, meaning they can charge a lower price and become more productive

Question 10

what is capital intensive?

Answer 10

where there is more machinery compared to workers
+ve
-operate 24-7
-cheaper in the long term
-produce consistent quality
-easier to manage than people
-ve
-specialised- only suit one task
-expensive to buy and maintain
-breakdown can delay whole production process
-reduce worker motivation

Question 11

what is labour intensive?

Answer 11

higher labour levels
+ve
cheaper for small scale production
cheaper for countries abroad
can be retrained to suit a new task
solve problems and make improvements
-ve
wages increase yearly which increases costs
harder to manage
can be unreliable- absent and holidays
may need motivating to increase production

Question 12

balance between capital and labour

Answer 12

capital intensive process- more machinery and equipment being used compared to labour
labour intensive process- where theres more input from humans compared to machinery
-in order to be productive and efficient, need the right balance between both
depends upon:
-finance available
-technology available
-labour available
-method of production used

Question 13

what is efficiency

Answer 13

when production happens at overall minimum average cost
get more output from a given input and reduce waste
if a business is more efficient, reduce their unit costs and increase profit
ways to increase efficiency:
-reducing costs- changing design mic
-lean management - reduce waste

Question 14

what is capacity?

Answer 14

the maximum amount of output that a business can produce in a given period of time
it depends on the number of employees and their skills, the investment, technology and production process of the business

Question 15

what is capacity utilisation?

Answer 15

a measure of the extent to which a business uses its production potential- how much capacity it actually uses
actual output
——————- x 100 = —–%
max possible output
-if its 100%, full capacity
businesses dont want to run at full capacity as their is no room for error
as capacity utilisation increases, fixed costs per unit decrease

Question 16

what is surplus capacity?

Answer 16

when the business has too many resources to reach its desired level of output

Question 17

mothballing

Answer 17

where the business has unused assets and beings them back to life when needed

Question 18

rationalisation

Answer 18

reducing the amount of resources

Question 19

what is over utilisation?

Answer 19

when a business is running at full capacity-100%
+ve
makes very high sales revenue with low unit costs
gives a good company image that they are busy
increase staff motivation
-ve
quality may not be consistent
may have to turn away potential orders as there isnt the capacity, and seasonal orders
no downtime for the machines- if one breaks down it stops whole production process- reduces the lifespan
no margin for error-need to get everything right first time

Question 20

What is under utilidation?

Answer 20

where there is too much capacity and not enough demand
can be due to :
-customer wants changing
-new competitor entering
-seasonal
+ve
-more time for maintanace and training
-less stressful than overutilisation
-can come with new orders
-ve
-spare capacity may portray a negative image
staff may be demotivated
higher cost per unit- reduce profitability

Question 21

ways to improve capacity utilisation

Answer 21

-increase sales
-reduce capacity
-outsource

Question 22

what is stock?

Answer 22

the raw materials/components, work in progress and finished products that are available to sell

Question 23

what is stock control?

Answer 23

the management process of making sure stock is ordered, delivered and handled in the best way possible

Question 24

factors affecting stock levels?

Answer 24

1- demand- higher demand means more stock
2- stockpile goods- build up of stock for busy periods
3- cost of stock- more expensive, less held
4-type of stock- perishable- less is held
5-amount of working capital available- if lower, then lower levels of stock
6- lead times time it takes for products to be made- if longer will have higher minimum stock level
7- external factors- fear of shortage in future means more stock is held

Question 25

what is buffer stock

Answer 25

stock that is held to make sure the business never completely runs out of stock- needed to meet unexpected orders
+ve
if u buy alot, can benefit from economies of scale
-ve
expensive- cost of storage and wasteage
capital is tied up when it can be used elswhere

Question 26

stock control diagram

Answer 26

allows managers to analyse and control stock
lead time- time it takes for stock to arrive after reordering
reorder quantity- amount the business orders from supplier

Question 27

too little stock

Answer 27

may not be able to meet new and unexpected orders- turns customers away and lose them
if deliveries are delayed, may need to stop production if not enough stock
-may need to place emergency orders

Question 28

too much stock

Answer 28

expensive- takes up space, insurance
need a premises which can be used more effectively
can cause cash flow problems as more money is tied up in stock
more wasteage

Question 29

what is lean management

Answer 29

produce more by using less- produce more output of a given quality by reducing amount of resources needed
-aims to reduce waste
-can involve recycling and reusing materials
-makes a business more efficient which can reduce costs
one example is just in time

Question 30

just in time

Answer 30

aims to reduce waste by reducing amount of stock held
-orders stock based in defenite orders- materials come in right when they are needed
-relies on efficient ordering and delivery systems
-little to no buffer stock held
-need a close relationship with suppliers
-as soon as product is finished, it is sent out to customers

Question 31

requirements for JIT

Answer 31

-flexibility
-quality
-good relationships with suppliers

Question 32

benefits of JIT

Answer 32

-reduces costs dont need storage space
-improves cash flow as less working capital is tied up in stock
stock less likely to perish

Question 33

drawbacks of JIT

Answer 33

very reliant on suppliers- can be hard and stressful to organise
no room for mistakes as no stock is kept to fix faulty products
cant meet unexpected orders