2.4 Resource Management Flashcards
What are the four methods of production?
Job production
Batch production
Flow production
Cell production
What is job production?
Making one-off items
What is batch production?
Making a group of products to a set specification then moving to next group
What is flow production?
Continuous production of one product
What is cell production?
Organising workers into groups to produce a range of goods.
What is productivity?
A measure of efficiency of production.
What is the formula for labour productivity?
Labour productivity = total output / number of workers
What four factors can influence productivity?
Technology
Quality and skills of employees
Motivation of employees
Production methods
What is the link between productivity and competitiveness?
Increasing productivity is likely to improve competitiveness through declining unit costs.
What is efficiency?
The extent to which the resources used in production generate output without waste.
What are three areas where waste may occur?
Time
Resources
Finished product (quality)
What three factors influence efficiency?
Quality and age of machinery
Skills and experience of workforce
Levels of motivation
What are the characteristics of capital intensive production?
Initial capital costs very high
Running costs relatively low
May offer little flexibility
What are the characteristics of labour intensive production?
Labour costs are a high proportion of total costs
Managing labour costs may be critical
May be greater scope for tailoring products
What is capacity utilisation?
Measures the extent to which a business uses its production potential.
What is the formula for capacity utilisation?
Capacity utilisation = actual output in time period / maximum possible output per time period x 100
Why is excess capacity useful?
Flexibility
Scope for new orders
Important in growing market
Scope for proper maintenance
What are the implications of capacity under-utilisation?
Fears for job security
Low morale
May contribute to poor reputation
What are the implications of capacity over-utilisation?
Little scope for new orders
Little time for necessary maintenance
How might a business react to having excess capacity?
Increase sales
Reduce capacity
Find alternative uses for plant
How might a business react to having a lack of capacity?
Outsource
Increase capacity
Reduce demand e.g. by dynamic pricing
What is stock control?
The level of raw material, work in progress and finished good held in a business
What factors affect the level of stock?
Nature of product
Nature of production
Nature of demand
Opportunity cost
What are the key features of a stock control diagram?
Buffer stock
Reorder level
Lead time
Maximum stock level
Reorder quantity
What is buffer stock?
The minimum amount of stock held to cover emergencies
What are the motives for holding a buffer stock?
Transaction motive: meet future sales
Precautionary motive: cushion for uncertainty
Speculative motive: take advantage of temporary low prices
What reasons are there for keeping buffer stocks of raw materials?
Supply chain delays
Faulty supplies
What reasons are there for keeping buffer stocks of finished goods?
Ensure business can supply customers
Allows firm to accept rush orders form customers
What are the implications of too little stock?
Lost customers
Delays in production
Loss of reputation
What are the implications of too much stock?
Opportunity cost
Cash-flow problems
Increased storage costs
Increased wastage
What is just-in-time management of stock?
Increase efficiency by decreasing waste by receiving only the required goods for production.
What are the benefits of JIT?
Reduce waste
Reduce costs
Reduce space needed
Increase flexibility
Provides for greater motivation
What are the drawbacks of JIT?
Risks running out stock
Loss of opportunities for bulk purchase
Requires trust in supplier
What is lean production?
An approach to management that focuses on cutting out waste while ensuring quality.
What techniques can be employed to achieve lean production?
Just-in-time
Kaizen
Total quality management
Outsourcing
What benefits can a business gain from lean production?
More input from staff
Better quality
Focus on waste management
What potential competitive advantage can a business gain from lean production?
High productivity
Higher quality leading to improved reputation
Less space needed for stock leading to lower costs
Faster development of new products
What methods of improving quality are there?
Quality control
Quality assurance
TQM
Quality circles
Kaizen
How can a business obtain competitive advantage from quality management?
Provide a USP
Charge higher prices
Increase sales
Enhance reputation and brand loyalty
