2.4 resource management Flashcards
What is production
transformation of resources into finished goods or services
What are goods
phsyical products
What are services
Non physical items such as hairdressing
What are the 4 main methods of production
Job production
flow production
batch production
cell production
What is job production
Producing one item at a time as ordered by the customer
What are the advantages of job production
high quality products
motivated and highly skilled workers
customised products can be made
What are the disadvantages of job production
Slow production
high labour costs
What is batch production
Groups of the same product are produced
Advantages of batch production
Workers can specialise
production can start as the previous batch runs out
Disadvantages of batch production
Requires careful co ordination to avoid shortages
money is tied up in stock
What is flow production
continuous manufacturing of standardised products
What are the advantages of flow production
low unit costs due to EoS
Rapid production
usually highly automated
what are the disadvantages of flow production
Customisation is difficult
capital equipment can be expensive
What is cell production
workers are organised into multi skilled teams, each team is then responsible for different parts of the production process
What are the advantages of cell production
more efficient than other methods
workers can share skills and expertise
high motivation as workers are in a team
Disadvantages of cell production
Extensive reorganisation of production process
team efficiency may be reduced by weak workers
What is productivity
the output per input per hour
What is the formula for labour productivity
output / number of workers
what is labour productivity
output per worker during a specified time period
what is capital productivity
measure of output of machinery during a specific time period
What is capital productivity formula
Output / number of machines
What are factors that influence productivity
Employee motivation
skills, education and training
investment in capital equipment
what is meant by competitiveness
the ability of a business to maintain or grow its sales and market share
What is efficiency
the ability of a business to use its production resources as cost effectively as possible
What is the formula for average cost per unit
total costs / number of units
When is maximum efficiency achieved
When the cost per unit is at its lowest
Factors that influence efficiency
standardisation of the production process
relocation or downsizing
investment in capital equipment
organisational restructuring
adoption of lean production techniques
how does standardisation of the production process influence efficiency
all staff use the same components and techniques in the production process
this allows for components to be bulk bought reducing variable costs
how can relocation influence efficiency
moving production to a cheaper location can reduce fixed costs
how does investment in capital equipment influence efficiency
`new machinery can increase output and lower costs
What is labour intensive production
mainly physical labour in the production of goods and services
What is capital intensive production
Mainly machinery and technology are used in the production of goods and services
what are the advantages to capital intensive production
low cost production when output is high
usually consistent
machines can run without breaks
what are the disadvantages to capital intensive production
significant uprfront and maintenance costs
breakdowns can delay production
limited flexibility?
what are the advantages to labour intensive production
Low cost production when labour costs are low
opportunities for workers to be creative
workers are flexible
What are the disadvantages to capital intensive production
Workers may be unreliable and require breaks
incentives are needed to motivate staff
training costs
What is capacity utilisation
The measure of the level to which a businesses assets are being used to produce output
What does capacity utilisation compare
Current output to the maximum possible output
What is the formula for capacity utilisation
(Current output / maximum possible output ) *100
What does a low level of capacity utilisation mean?
A business is not utilising its resources to the biggest potential.
Likely to lead to increased unit costs
what are the positives to a low level of capacity utilisation
it provides the business with flexibility
the business is able to respond to sudden increases in demand
What does a high level of capacity utilisation mean
the business is making the most of its assets and resources
likely to minimise unit costs
What are the negatives of a high capacity utilisation
minimum flexibility to respond to new customer orders
staff are under pressure
staff may be overworked -> high staff turnover
machinery may be pushed to its limits causing breakdowns
What are 5 ways to increase capacity utilisation
Increase sales
increase usage
outsourcing
reduce capacity
redeployment
How does an increase in sales cause capacity utilisation to increase
more sales means more unit to be produced
How does outsourcing improve capacity utilisation
subcontracting some tasks to outside the business can increase the level of output
How does redeployment improve capacity utilisation
move underused or unused resources to other business areas that need them
What does a stock control diagram illustrate
The flow of stock into and out of a business over time
What is the maximum stock level
The maximum amount of stock a business is able to hold.
What s the reorder level
The level at which a business places a new order with its supplier
What is the minimum stock level
Also known as buffer stock is the lowest level to which a business is willing to allow stock levels to fall
What is the lead time
The length of time from when stock is ordered to when it is delivered
What is buffer stock
a quantity of resources kept in case of stock shortages
just in case
Advantages to holding buffer stock
Stable supply of goods incase of a rise in customer demand
price stability as it avoids shortages in the market
raw materials security- avoid disruption to their supply
competitive advantage - good reputation for always meeting customer needs
What are the disadvantages to holding buffer stock
cost - expensive as it requires storage space
buffer stock may become useless if demand for the product declines
opportunity cost- the capital invested in buffer stock could be invested into other areas of the business
What are the problems that may arise if a business holds too much stock?
High storage costs
risk of spoilage increases
opportunity cost
stock may decline in demand
What are the problems that may arise if a business holds too little stock?
risk of stock out
stoppages in production
loss of potential sales
unexpected increases in demand cannot be met
What is JIT stock management
Just in time stock management is where stock is not stored onsite but rather order and delivered by suppliers just in time for production
What are the advantages to JIT stock management
Minimised storage costs
close working relationships with suppliers
improved cash flow as its not stuck in stocks
any unused storage space can be used for production
teamwork is encouraged
What are the disadvantages to JIT stock management
bulk buying is not possible
unable to respond to unexpected increases in demand
unreliable suppliers can halt production
What are 3 ways to minimise waste
Storage - refrigeration
planning - forecasting
sales tactics - reduce prices to increase sales
What is lean production
the minimisation of resources used in production
What are the benefits of lean production
less time is required as the production process is as efficient as possible
fewer materials are use as there is a focus on waste reduction
less labour - (capital intensive)
lower unit costs
better quality output
What does quality consider
the characteristics and features of a product to satisfy customer needs
What is quality control
inspecting the quality of the product at the end of the production process
What are the benefits to quality control
quality specialists ensure quality
inexpensive and simple
What are the negatives to quality control
rejection of finished goods is a waste of resources
little focus o0n cause of the defects
What is quality assurance
inspecting the quality of the product throughout the production process
What are the benefits of quality assurance
quality issues are identified early so products can be reworked
cause of defects is the focus
What are drawbacks to quality assurance
Staff training and skilled workforce is required
reworking the product can lengthen production
What is TQM
total quality management is where quality is at the core of businesses organisation and every worker is responsible for quality
Benefits to TQM
quality in all aspects of the business improves efficiency
A culture of constant improvement exists within the business
Negatives of TQM
All workers must be committed and received continued training
careful monitoring and control is required
What is kaizen
A business focuses on continuous improvements to productivity through eliminating all waste in the production process
