2.4.1

Question 1

What is job production?

Answer 1

○ Only one product is produced at a time
○ Used when orders for products are small
○Examples: Baking cakes, Crossrail

Question 2

Benefits of job production?

Answer 2

○ Quality of production is high
○ Varied work means workers are more motivated
○ Products can be custom made more easily

Question 3

Negatives of job production?

Answer 3

○ Higher labour costs
○ Production times may be slower
○ Generally this is an expensive method of production

Question 4

What is batch production?

Answer 4

○ Used when demand for a product is regular
○ Example: Furniture
○ Production is carried out in operations, the same process is done to the entire batch at the same time

Question 5

Benefits of batch production?

Answer 5

○ Workers specialise in one operation of the production
○ Unit costs are lower because of a higher output
○ Production is flexible as different orders can be met

Question 6

Negatives of batch production?

Answer 6

○ Careful planning and co-ordination is required
○ If batches are only small, unit costs can still be high
○ Money can be tied up in work-in-progress

Question 7

What is flow production?

Answer 7

○ Different operations are carried out one after the other in a continuous sequence
operation to the next along a conveyer belt
○ Uses a semi-skilled workforce only specialising in one operation of production
○ Large amount of machinery and equipment are used
○ Large stocks of raw materials and compound are used
○ Examples: Newspapers, food, cement, cars etc

Question 8

Benefits of flow production?

Answer 8

○ Very low unit costs due to the economy of scale
○ Output can be produced very quickly
○ Modern machines can allow for more flexibility
○ Production speed can be varied according to the current demand

Question 9

Negatives of flow production?

Answer 9

○ Products may be too standardised
○ Huge set-up costs have to be incurred before production can even begin
○ Breaks in production can prove very expensive

Question 10

What is cell production?

Answer 10

○ Workplace is divided into cells, each cell is concerned with the production of ‘product families’, which are groups of products which require a sequence of similar operations
○ Inside a cells machines are grouped together in order to complete one good from start to finish

Question 11

Benefits of cell production?

Answer 11

○ Product flexibility is increased
○ Lead times are able to be reduced
○ Team working is encouraged

Question 12

Negatives of cell production?

Answer 12

○ A firm may not be able to use machinery as efficiently compared to flow production
○ Output will be lower than mass production
○ More investment and planning is required in a new management and control process

Question 13

What is productivity?

Answer 13

Measurement between inputs into the production process and the resultant outputs, such as:
→ Output per worker
→ Output per hour/day/week/month/year
→ Output per machine

Question 14

How do you calculate unit cost?

Answer 14

Divide total costs by the number of units produced. This measures the average cost per unit produced, as measured over a particular time period

Question 15

What are economies of scale?

Answer 15

Cost advantages that a business can exploit by expanding their scale of production. Most businesses find that, as production output increases, they can achieve lower costs per unit.

Question 16

What are the 6 types of economies of scale?

Answer 16

Technical 
Specialisation/managerial
Purchasing 
Financial 
Marketing 
Risk bearing

Question 17

What effect does specialisation/managerial economies of scale have on a business?

Answer 17

Larger businesses can split complex production processes into separate task and specialised teams, therefore greater specialisation and productivity at the same time

Question 18

What effect do technical economies of scale have on a business?

Answer 18

Large business can invest in economy of scale in expensive specialist equipment/machinery e.g. Tesco may invest in expensive stock control technology

Question 19

What effect do marketing economies of scale have on a business?

Answer 19

Larger business can spread advertising/marketing budget over a larger output

Question 20

Examples of labour intensive businesses?

Answer 20

Hotels, fruit farming, hairdressing

Question 21

Features of labour intensive businesses?

Answer 21

• Labour costs higher than capital costs
• Costs are mainly variable = lower breakeven output
• Firms benefit from access to sources of low-cost labour

Question 22

Examples of capital intensive businesses?

Answer 22

• Transport companies
• Oil refinery
• Car manufacture

Question 23

Features of a capital intensive business?

Answer 23

• Capital costs higher than labour costs
• Costs are mainly fixed = higher breakeven output
• Firms benefit from access to low-cost, long-term financing

Question 24

Benefits of labour intensity?

Answer 24

• Can outsource to low labour cost areas
• Can have a specialised workforce
• Lower break even point
• They can be trained to work in more than one area
• Ideas of workers can help improve production

Question 25

Drawbacks of labour intensity?

Answer 25

• Productivity can be lowerthan a machine
• Can be less reliablecoming into work
• You have to provide job security
• Not as consistent as a machine might be
• Employee turnover costs a lot of money

Question 26

Benefits of capital intensity?

Answer 26

• Potential of higher productivity rate
• Benefit of economy of scale
• Lower unit costs
• Business can be more competitive
• Better for standardised products
• Ensures higher quality and speed
• Can run overnight if needed
• Reduces labour costs

Question 27

Drawbacks of capital intensity?

Answer 27

• You cannot customise the product as easily
• They don’t know when it makes mistakes
• Regular maintenance costs
• Breakdown can halt all production
• Higher breakeven point due to higher fixed costs
• Significant investment costs
• Machines need to be monitored by a person
• They can easily become obsolete

Question 28

What is unit cost?

Answer 28

The average cost per unit produced, as measured over a particular time period

Question 29

What is economy of scale?

Answer 29

The effect of unit costs falling as output rises