2.4 Resource Management

Question 1

What are the four methods of production?

Answer 1

Job production
Batch production
Flow production
Cell production

Question 2

What is job production?

Answer 2

Making one-off items

Question 3

What is batch production?

Answer 3

Making a group of products to a set specification then moving to next group

Question 4

What is flow production?

Answer 4

Continuous production of one product

Question 5

What is cell production?

Answer 5

Organising workers into groups to produce a range of goods.

Question 6

What is productivity?

Answer 6

A measure of efficiency of production.

Question 7

What is the formula for labour productivity?

Answer 7

Labour productivity = total output / number of workers

Question 8

What four factors can influence productivity?

Answer 8

Technology
Quality and skills of employees
Motivation of employees
Production methods

Question 9

What is the link between productivity and competitiveness?

Answer 9

Increasing productivity is likely to improve competitiveness through declining unit costs.

Question 10

What is efficiency?

Answer 10

The extent to which the resources used in production generate output without waste.

Question 11

What are three areas where waste may occur?

Answer 11

Time
Resources
Finished product (quality)

Question 12

What three factors influence efficiency?

Answer 12

Quality and age of machinery
Skills and experience of workforce
Levels of motivation

Question 13

What are the characteristics of capital intensive production?

Answer 13

Initial capital costs very high
Running costs relatively low
May offer little flexibility

Question 14

What are the characteristics of labour intensive production?

Answer 14

Labour costs are a high proportion of total costs
Managing labour costs may be critical
May be greater scope for tailoring products

Question 15

What is capacity utilisation?

Answer 15

Measures the extent to which a business uses its production potential.

Question 16

What is the formula for capacity utilisation?

Answer 16

Capacity utilisation = actual output in time period / maximum possible output per time period x 100

Question 17

Why is excess capacity useful?

Answer 17

Flexibility
Scope for new orders
Important in growing market
Scope for proper maintenance

Question 18

What are the implications of capacity under-utilisation?

Answer 18

Fears for job security
Low morale
May contribute to poor reputation

Question 19

What are the implications of capacity over-utilisation?

Answer 19

Little scope for new orders
Little time for necessary maintenance

Question 20

How might a business react to having excess capacity?

Answer 20

Increase sales
Reduce capacity
Find alternative uses for plant

Question 21

How might a business react to having a lack of capacity?

Answer 21

Outsource
Increase capacity
Reduce demand e.g. by dynamic pricing

Question 22

What is stock control?

Answer 22

The level of raw material, work in progress and finished good held in a business

Question 23

What factors affect the level of stock?

Answer 23

Nature of product
Nature of production
Nature of demand
Opportunity cost

Question 24

What are the key features of a stock control diagram?

Answer 24

Buffer stock
Reorder level
Lead time
Maximum stock level
Reorder quantity

Question 25

What is buffer stock?

Answer 25

The minimum amount of stock held to cover emergencies

Question 26

What are the motives for holding a buffer stock?

Answer 26

Transaction motive: meet future sales Precautionary motive: cushion for uncertainty Speculative motive: take advantage of temporary low prices

Question 27

What reasons are there for keeping buffer stocks of raw materials?

Answer 27

Supply chain delays Faulty supplies

Question 28

What reasons are there for keeping buffer stocks of finished goods?

Answer 28

Ensure business can supply customers Allows firm to accept rush orders form customers

Question 29

What are the implications of too little stock?

Answer 29

Lost customers Delays in production Loss of reputation

Question 30

What are the implications of too much stock?

Answer 30

Opportunity cost Cash-flow problems Increased storage costs Increased wastage

Question 31

What is just-in-time management of stock?

Answer 31

Increase efficiency by decreasing waste by receiving only the required goods for production.

Question 32

What are the benefits of JIT?

Answer 32

Reduce waste Reduce costs Reduce space needed Increase flexibility Provides for greater motivation

Question 33

What are the drawbacks of JIT?

Answer 33

Risks running out stock Loss of opportunities for bulk purchase Requires trust in supplier

Question 34

What is lean production?

Answer 34

An approach to management that focuses on cutting out waste while ensuring quality.

Question 35

What techniques can be employed to achieve lean production?

Answer 35

Just-in-time Kaizen Total quality management Outsourcing

Question 36

What benefits can a business gain from lean production?

Answer 36

More input from staff Better quality Focus on waste management

Question 37

What potential competitive advantage can a business gain from lean production?

Answer 37

High productivity Higher quality leading to improved reputation Less space needed for stock leading to lower costs Faster development of new products

Question 38

What methods of improving quality are there?

Answer 38

Quality control Quality assurance TQM Quality circles Kaizen

Question 39

How can a business obtain competitive advantage from quality management?

Answer 39

Provide a USP Charge higher prices Increase sales Enhance reputation and brand loyalty