2.4 - Resource Management Flashcards
What are the 4 methods of production?
- Job production
- Batch production
- Flow production
- Cell production
What are the key features of job production ?
- One product made from start to finish
- Usually made to customers specification
- Often made by small specialist businesses
Advantages of job production?
- Higher quality (premium prices)
- Customer changes and requirements can be handled
- Motivated employees
- Flexible production method
Disadvantages of job production?
- Individual cost of single unit costly
- High labour costs
- Needs close consultation with clients
- Reliant on high skills
Key features of batch production?
- Similar items produced together
- Different batches
Advantages of batch production?
- Cost saving (bulk buy)
- Allows customers some choice
- Allows to work on unexpected orders
Disadvantages of batch production?
- Takes time to switch production to new batch
- Need to maintain high stock levels
- Reduced motivation (boring tasks)
- Size of batch is dependent on capacity
Key features of flow production?
- High volumes of same product
- Product moves continuously through production process
Advantages of flow production?
- Cost per unit reduces (bulk buy)
- Suitable for large quantities
- Capital intensive (24/7 work)
- Requires less training
Disadvantages of flow production?
- Long set up time & needs high quality machinery
- Less differentiation for customer
- Production stopped if flow stops
Key features of cell production?
- Work organised into teams who work in a cell
Advantages of cell production?
- Productivity
- Increased motivation
- Specialist staff
Disadvantages of cell production?
- Long set up time
- Training takes time
- Needs good organisation
Factors that businesses use to decide on production methods.
- Target market
- Technology
- Resources
- Standards
What does productivity measure?
Measure the relationship between inputs into the production process and the resultant outputs.
E.g Output per machine
What is capacity utilisation?
What proportion of the maximum output that they are actually producing.
Why is capacity utilisation an important concept?
- Used as a measure of productive efficiency
- Average production costs tend to fall as output rises
Benefits of working at 100% capacity utilisation.
- More revenue
- Lower unit costs
Drawbacks of working at 100% capacity utilisation.
- Demotivated staff
- Can’t maintain machinery so could break down
- May be hard to meet new and unexpected orders
- Mistakes-pressure & labour turnover
- Less efficient if overcrowded
- Have to pay overtime
What is labour intensive?
A process that involves a large workforce or a large amount of work in relation to output.
What is capital intensive?
A process that involves large investments of money on things like automation.
Pros of labour intensive?
- Flexible resource (training & multi-skilled)
- Mainly variable costs
- Unit costs may be low in low-wage locations
Cons of labour intensive?
- Risk of problems with staff/employer
- Possible of high costs of labour turnover
- Costs of training
Pros of capital intensive?
- Economies of scale
- Better productivity
- Better quality and speed
- Lower labour costs
Cons of capital intensive?
- Big investment
- Resistance to change from staff
What is capacity?
A measure of how much output it can achieve in a given period
Ways to increase capacity?
- Increase workforce hours
- Stop maintenance for a period of time
- Sub-contract some production processes
What are the 3 categories of stock?
- Raw materials
- Work in progress
- Finished goods
Why do businesses hold stock?
- Enables production
- Satisfies customer demands
- Precaution from supply delay
- Provides a buffer
- Efficient production
- Allows seasonal changes
Why is stock management important?
- Need to have enough stock that is right
- Lots of cash tied up in stock (could be used elsewhere)
Factors businesses need to consider when deciding how much stock to hold.
- Need to satisfy demand
- Need to manage working capital
- Risk of stock losing value
Impact of holding too much stock?
- Cost of storage
- Interest costs
- Going out of style / expiring
- Theft
- Not as lean
What is lead time?
How long it takes for the supplier to deliver the order.
Benefits of holding lots of stock?
- Lower unit costs
- Less likely to experience stock outs
- No production delays
- Can handle unexpected changes in demand
What is quality?
Quality is about meeting the needs and expectations of customers.
Pros and cons of quality?
+ Good reputation
+ Loyalty
+ Retailers want to stock product
+ Premium price
+ Fewer returns
- Product failure
- Lost customers
- Poor reputation
- Costs of remakes
- Cost of returns
- Wasted materials
What is quality control?
Traditional approach that involves a specially trained team to check a sample of products.
What is quality assurance?
Modern method which encourages workers to check the quality of their own work throughout the production line.
Pros and cons of quality control?
+ Prevents release of faulty products
+ Specially trained staff / less mistakes
- Quality team costs
- Only check at the end
Pros and cons of quality assurance?
+ Don’t have to pay for a team
+ High staff motivation
+ Less wastage
- Could add stress to employees
- Staff may expect higher wages
