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Business Studies Theme 2 > 2.4 - Resource Management > Flashcards

2.4 - Resource Management Flashcards

1
Q

4 methods of production

A
  • Job
  • Batch
  • Flow
  • Cell
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2
Q

Define job production

A

Involves making one-off items to suit each customer’s individual requirements

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3
Q

Benefits of job production (2)

A
  • Can charge a higher price as products can be tailored to meet exact specifications
  • Work should be more interesting for staff
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4
Q

Drawback of job production (2)

A
  • Cost per unit is very high due to gift level of skill and low rates of production
  • Finding staff with sufficient skill can be hard and pay will have to be high
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5
Q

Define batch production

A

Makes a group of products to one specification at a time, allowing some variation in products, yet some specialisation

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6
Q

Benefits of batch production (2)

A
  • Allows variation in the product being made

* Speedier than job production as making a batch of identical products speeds up production

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7
Q

Drawbacks of batch production (2)

A
  • More costly to set up than job production as some specialist machinery will be needed
  • Cost per unit will still be higher than flow production as machinery will need to be adjusted between batches
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8
Q

Define flow production

A

Refers to continuous production of a single, standardised product

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9
Q

Benefits of flow production (2)

A
  • Unit labour costs are extremely low

* High volumes allow huge demand in mass markets to be met

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10
Q

Drawbacks of flow production (2)

A
  • High initial costs of installing production machinery

* Products need to be identical - no tailoring to suit different tastes

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11
Q

Define cell production

A

Involves organising workers into small groups or cells that can produce a range of different products more quickly than job production allows

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12
Q

Benefits of cell production (2)

A
  • Group working allows ideas to be generated within the cell improvements to processes
  • The small highly skilled cell can adjust products to suit customers’ needs
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13
Q

Drawbacks of cell production (2)

A
  • As it is still heavily reliant on people rather than automation, costs are relatively high
  • Production volumes will not be as high as flow production
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14
Q

Define productivity

A
  • Is a measure of the efficiency of the production processes
  • It is usually measured as output per worker per time period
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15
Q

Formula for productivity

A

(Total output / number of workers) or (output per worker / time period)

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16
Q

Factors influencing productivity (3)

A
  • Quality and age of machinery
  • Skills and experience of workers
  • Level of employee motivation
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17
Q

What is the link between productivity and competitiveness?(2)

A
  • Higher levels of productivity lead to lower unit costs - this is because the labour cost involved in making each unit as workers work faster
  • Lower unit costs allow businesses to cut prices while maintaining the same profit margin
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18
Q

Define efficiency

A

Measures the extent to which the resources to which the resources used in process generate output without wastage

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19
Q

Factors influencing efficiency (3)

A
  • Quality and age of machinery
  • Skills and experience of workers
  • Level of employee motivation
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20
Q

Impact of quality and age of machinery on productivity

A

Newer machinery may work faster, and break down less

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21
Q

Impact of quality and age of machinery on efficiency

A

Fewer breakdowns mean fewer faults and newer machinery may produce with less variation

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22
Q

Impact of skills and experience of workers on productivity (2)

A
  • Highly skilled staff can produce things faster

* Experience brings knowledge of how to complete tasks with high efficiency and quality

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23
Q

Impact of skills and experience of workers on efficiency (2)

A
  • Skilled staff are likely to make fewer mistakes

* Experience can mean staff spot the problems that lead to faults before they occur

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24
Q

Impact of level of employee motivation on productivity

A

Motivated staff are likely to focus on the task without distraction and to work as quickly as they can

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25
Q

Impact of level of employee motivation on efficiency

A

Motivation brings pride in work - motivated staff will be careful not to make roots and to lose concentration less

26
Q

Define labour intensive production

A

Means that a production process relies heavily on human input with little use of automation

27
Q

Key issues relating to labour intensive production:
2 disadvantages
1 advantage

A
  • Labour costs will form a high proportion of total costs
  • Managing labour cost becomes critical - could force a firm to move abroad to lower-wage countries or spend heavily on motivational methods
  • Offers far greater scope for tailoring products to suit customers’ needs thus adding value and allowing a higher selling price
28
Q

Define capital intensive production

A

Uses high levels of automation, reducing the role of humans of humans as much as possible, replacing them with machines

29
Q

Key issues relating to capital intensive production
2 disadvantages
1 advantage

A
  • Initial costs will be very high with the need to invest in a lot of specialist machinery
  • Running costs will be low
  • It may offer little flexibility in terms of product variations
30
Q

What is capital utilisation?

A

Is the proportion of maximum capacity being used by the business

31
Q

Formula for capacity utilisation

A

(Current output / maximum possible output) x 100

32
Q

Implications of under-utilisation of capacity (3)

A
  • Lead to fears for job security among staff, damaging motivation
  • Cause poor moral among managers
  • Contribute to a poor reputation for the business, especially in the service sector, imagine a restaurant that usually has many tables empty even during busy periods
33
Q

Implications of over-utilisation of capacity

A
  • The firm may be unable to accept any new order, potentially turning away new customers to rivals
  • There will be little or no time to carry out maintenance on machines or train staff
34
Q

2 Ways of improving capacity utilisation

A
  • Increase current output

* Reduce maximum capacity

35
Q

Ways of improving capacity utilisation - increase current output (2)

A
  • This is likely to be accomplished using marketing methods to boost the volume of sales made by the business, perhaps through advertising or cutting the selling price
  • Alternatively the business could use its capacity t make products for other businesses looking to subcontract work
36
Q

Ways of improving capacity utilisation - Reduce maximum capacity

A

This will involve selling off assets or laying off staff - although redundancies can be costly in the short term but in the long term it reduces fixed costs

37
Q

Key features of a stock control diagram (4)

A

• The maximum stock level set by the business, strongly affected by the amount of space available and the firm”a stock-holding policy
• The minimum or buffer stock level, i.e the amount of stock of that item that the business aims to always have available
• The re-order quantity, which is the vertical upwards, is the amount of stock ordered each time an order is placed
• The lead time, or delivery times, which is the horizontal between a re-order being placed and the delivery of stock arriving
(Photo of graph)

38
Q

Reasons for keeping buffer stocks of raw materials (2)

A
  • If deliveries are delayed, buffer stock allows production to continue
  • If a batch of supplies is found to be faulty, the buffer stock can be used to continue production
39
Q

Reasons for keeping buffer stocks of finished goods (2)

A
  • Helps to ensure that the business can always supply customers when they need a product with the right size or colour
  • Allows firms to accept rush order from customers
40
Q

Implications of poor stock control - too much stock (5)

A
  • Opportunity cost - ties up capital as stock prevents that money from being used in other ways
  • Cash flow problems - danger that a firm could run out of actual cash
  • Increased storage costs - keeping stock is costly as it needs space, security or potential refrigeration costs
  • Increased financing costs - if stock has been purchased using any form of borrowing the firm will have to pay interest costs
  • Increased wastage - too much stock may lead to stock “going off” or becoming obsolete
41
Q

Implications of poor stock control - too little stock (3)

A
  • lost customers
  • Delays in production - employees left idle until stock is delivered
  • Loss of reputation - bad word of mouth promotion about how the firm struggles to maintain enough stock to meet customer needs promptly
42
Q

What is just-in-time stock management? (3)

A
  • Is a Japanese-rooted approach to stock management that aims to eliminate buffer stock completely
  • Eliminate costs of stock-holding
  • Increased danger of production halting due to a lack of materials
43
Q

Key issues to consider for a firm using JIT stock management (5)

A
  • Suppliers must be willing to deliver frequently (often several times a day)
  • Deliveries must be absolutely reliable; missed deliveries leave the firm without stock
  • Suppliers May need to relocate close to the company using just-in-time
  • Will smaller, more frequent deliveries lead to a loss of bulk-buying discounts?
  • Will frequent deliveries lead to increased congestion and pollution from lorries ?
44
Q

Define waste minimisation

A

Is the aspect of lean production that focuses on reducing waste in any business process, such as wasted time, labour on materials

45
Q

How does waste minimisation reduce waste? (3)

A
  • Less stock is held, meaning there is far less likelihood of stock wastage
  • Cash is not tied up in stock, effectively wasting
  • Removing buffer stocks helps to highlight bottlenecks and problems in production processes. This can be ironed out by adjusting the production system
46
Q

Define lean production

A

Is a collective term for a range of Japanese techniques designed to eliminate waste from business processes

47
Q

How can lean production improve the way businesses are run? (4)

A
  • More input from staff
  • A focus on quality
  • Fewer wasted resources through just-time-time and total quality management
  • A focus on reducing wasted time, so speed can become become a source of competitive advantage
48
Q

Factors that lead to sources of competitive advantage (4)

A
  • Higher levels of productivity, reducing labour cost per unit
  • Less space used to hold lower stock levels, reducing fixed costs
  • Higher quality, leading to reputations advantages and greater repeat custom
  • Faster development of new products, allowing the firm to be first to market with new ideas
49
Q

Quality control (2)

A
  • Involves checking output to find any faults in a production system
  • An inspection of output is carried out by a person not involved in working on or making the products
50
Q

Quality Assurance (3)

A
  • This system focuses on producing methods to prevent quality problems arising
  • These methods are checklists or procedures that form a part of company policy
  • If procedures are followed the system is designed to prevent any quality problems
51
Q

Total quality management (2)

A
  • Involves encouraging staff to get things ‘right first time’
  • Quality becomes a part of everybody’s job
52
Q

Pros of Total quality management (2)

A
  • Should becomes deeply rooted into the company culture e.g product safety at a producer of baby car seats
  • Once all staff think about quality it should show through from design to manufacture and after-sales service e.g Lexus or BMW
53
Q

Cons of total quality management (2)

A
  • Especially at first, staff are sceptical of management initiatives as they are not a clear concrete programme as QC or QA
  • To get TQM into the business culture may be expensive, as it will require extensive training among all staff
54
Q

Pros of quality control (2)

A
  • Can be guaranteed that no defective item will leave the factory
  • Requires little staff training: therefore suits a business with unskilled or temporary staff (as ordinary workers don’t need to worry about quality)
55
Q

Cons of quality control (2)

A
  • Leaving quality for the inspectors to sort out may mean poor quality I’d built in to the product
  • Qc can only be trusted when 100% of output is tested
56
Q

Pros of quality assurance

A
  • Makes sure the company has a quality system for every stage in the production process
  • Some customers like the reassurance provided by keeping records about quality checks at every stage in production; they believe they will get a higher-quality service and may be more willing to pay more
57
Q

Cons of quality assurance (2)

A
  • QA does not promise a high-quality product, only a high quality reliable process; this process may churn out standard products reliably
  • QA May encourage complacency; it suggests quality has been sorted whereas rising customer requirements mean quality should keep moving ahead
58
Q

Define quality circle

A

Is a group of staff who meet regularly to find quality improvements

59
Q

Key aspects of continuous improvement/kaizen (5)

A
  • Cell production
  • Quality circles
  • Small but frequent changes
  • Regular suggestions
  • Quality and productivity improvements
60
Q

What competitive advantages can be gained from quality management? (4)

A
  • It allows price premium to be charged (often greater than the extra cost of producing high quality)
  • It helps to gain distribution, with retailers confident they will not need to deal with product returns and refunds
  • Creates brand loyalty and repeat purchase
  • It can help to build a brand reputation that spreads to other products within a firm’s portfolio

Business Studies Theme 2 (5 decks)

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