2.4 - Resource Management Flashcards
Methods of production
- Job
- Batch
- Flow
- Cell
Job production
When a one off or small number of items are produced
Advantages of job production
- Customer requirements and changes can be handled
- Associated with higher quality
- Employees can have more job satisfaction making them more motivated
Disadvantages of job production
- Unit costs may be high
- Labour intensive so high labour costs
- Usually requires highly skilled workers
Batch production
When similar items are produced together offering standard products with some options
Advantages of batch production
- Cost savings can be achieved by buying in bulk
- Still allows customers some choice
- Allows a firm to handle unexpected orders
Disadvantages of batch production
- Takes time to switch production of one batch to another
- Requires business to maintain higher stocks of raw materials and work in progress
- Tasks may become repetitive and boring
Flow production
When a product moves continuously through the production process so as one task is finished the next one starts immediately
Advantages of flow production
- Unit costs are lower due to higher outputs produced and improved work flow
- Suitable for manufacture of large quantities
- Less need for training and skills
Disadvantages of flow production
- Very long set up time and reliant on high quality machinery
- High raw materials and finished stocks unless lean production is used
- Goods are mass produced so less differentiation for the consumer
Cell production
When work is organised into teams giving each team responsibility of doing part of the production process as a product moves through the assembly line
Advantages of cell production
- Motivating for workers to see completed product and work in teams
- Less time moving from place to place
Disadvantages of cell production
- Could create tension in or between cells if work gets competitive
- Huge investment in machinery for each cell
Labour productivity
The amount a worker produces
Formula for labour productivity
Output / Number of employees
Ways to improve productivity
- Training
- Improved employee motivation
- More capital equipment
- Improved organisation of production
Efficiency
Ability of a business to maximise output while minimising input, such as time, cost, and resources
Factors affecting efficiency
- Level of wastage in production
- Achieving the right balance between variable factors that affect efficiency, such as equipment and staff
Formula for unit costs
Total production costs / Total output
Economies of scale
When unit costs fall as output increases
Types of economies of scale
- Purchasing
- Technical
- Marketing
- Network
- Financial
Purchasing economies of scale
When firms buy in larger quantities which results in lower unit costs
Technical economies of scale
When firms use specialist equipment or processes to boost productivity
Marketing economies of scale
When a firm spreads a fixed marketing spend over a larger range of products, markets and customers