2.4 - Resource Management Flashcards
Production
The transformation of resources into finished goods or services.
4 methods of production
Job production
Flow production
Batch production
Cell production
Job production
Producing one item at a time, as ordered by the customer.
Advantages and Disadvantages of job production
Adv - High quality, motivated and skilled workers, customised products.
Dis - Slow production and high labour costs.
Batch production
Groups of the same product are produced, before moving on to a group of different products.
Advantages and disadvantages of Batch production
Adv- workers can specialise, production can take place as the previous ‘batch’ starts running out.
Dis- Require careful coordination to avoid shortages, money is tied up in stock as completed products need to be stored.
Flow production
Continuous manufacturing of standardised products, usually on a production line.
Advantages and disadvantages of flow production
Avd- Low unit costs due to economies of scale, rapid production, usually automated (capital intensive).
Dis- customisation is difficult, capital equipment can be expensive to purchase.
Cell production
Involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process.
Advantages and disadvantages of Cell production
Adv- more efficient as workers share skills and expertise, motivation is high due to teamwork.
Dis- extensive reorganisation of production process, team efficiency reduced by weaker workers.
labour productivity
Measure of output per worker during a specific time period
Labour productivity formula
Labour productivity = output/no. of workers
Capital productivity
Measure of the output of capital employed (e.g. machinery) during a specific period of time.
Capital productivity formula
Capital productivity = output/no. of machines
Factors influencing productivity
Employee motivation, staff training, investment in capital equipment.
Efficiency
The ability of a business to use its production resources as effectively as possible.
Efficiency calculation
Efficiency = total costs/no of units.
Capacity utilisation
A measure of the level to which a businesses assets are being used to produce output.
Capacity utilisation formula
(Current output/maximum possible output) x100
Under-utilisation
Fixed costs spread over fewer units of output resulting in higher average total costs, workers may be under-deployed leading to fears of redundancy.
Over-utilisation
Staff under high pressure to produce high levels of output, overworked staff may be inclined to leave increasing staff turnover
5 ways to reduce capacity utilisation
Outsourcing
Reduce capacity
Redeployment
Increase sales
Increase usage
Stock control diagram
Buffer stock
A quantity of goods/raw materials kept in case of stock shortages.
Can provide competitive edge over rivals unable to meet demand.
Poor stock control
Just in time (JIT) stock management
Raw materials are not stored onsite, they are delivered by suppliers ‘just in time’ for production.
Lean production
Involves the minimisation of the resources used in production.
Quality control
Inspecting the quality of output at the end of the production process.
Quality assurance
Inspecting the quality of production throughout the production process.
Quality circles
Groups of workers meet regularly to solve quality problems identified in the production process.
Total quality management (TQM)
Organisation of the business with quality at its core and with every worker responsible for quality.
Kaizen
Involves taking continuous steps to improve productivity through the elimination of all types of waste in the production process.
Changes are small and ongoing rather than significant.
