2.4.1 production, productivity and efficiency Flashcards
definition of production
the process of transforming inputs into outputs
definition of job production
one-off production of a product, made to customers specifications
advantages of job production
high quality good/service
motivated and highly skilled workers
customer requirements and changes can be handled
disadvantages of job production
labour costs are high
production is slow
unit cost may be high
definition of batch production
similar items produced together as a batch
advantages of batch production
workers can specialise
cost savings can be achieved (buying in bulk)
allows a firm to handle unexpected orders
disadvantages of batch production
requires careful coordination to avoid shortages
money is tied up in stock
tasks may become repetitive - reducing motivation
definition of flow production
products move continuously through each production process without stopping
advantages of flow production
low costs per unit due to economies of scale
rapid production - suitable for manufacturing of large quantities
capital intensive - can work constantly
disadvantages of flow production
worker motivation may be decreased - repetitive tasks
customisation is difficult - goods are mass produced
capital equipment can be expensive
definition of productivity
measures the relationship between inputs and outputs within the production process
production NN
the total amount of output pr
definition of labour productivity
a measure of the output per worker during a specified period of time
labour productivity formula
labour productivity = output / number of workers
definition of capital productivity
a measure of the output of capital employed (e.g. machinery) during a specified period of time
capital productivity formula
capital productivity = output / number of machines
what is the link between productivity and competitiveness?
increased productivity = lower unit costs = higher profit margins = better competitiveness
how does employee motivation influence productivity?
motivated workers are more productive
- financial incentives may increase worker productivity
- non-financial incentives (e.g. including workers in decision-making) may increase their commitment and productivity
how does skills, eduction and training staff influence productivity?
well trained and educated workers are more likely to be able to make useful contributions to decisions
- can lead to improvements in productivity
workers are more autonomous - less need for supervision
how do business organisation and working practices influence productivity?
flexible/adaptable workplaces can improve the commitment of workers and allow a business to respond to changes in demand
hours/location can be adapted to better suit the needs of workers
how does investment of capital equipment influence productivity?
increased automation can improve levels of output and quality
well chosen machinery is less likely to make mistakes than humans
machines/technology can operate for long periods without a break - as long as they are properly maintained
definition of productive efficiency
the lowest unit cost at which production can take place
definition of unit cost
the cost of making one product
average unit cost (AUC) formula
AUC = total production costs / output
how does the standardisation of the production process influence efficiency?
occurs when all staff use the same components and techniques in the production process
training of workers is minimised
bulk-buying of components reduces variable costs
how does relocation/downsizing influence efficiency?
moving production to a cheaper/smaller location can reduce fixed costs
labour intensive businesses look for low wage locations
capital intensive businesses look for lower rent/land costs
HOWEVER : relocation is very disruptive and will incur significant short-term costs
how does investment in capital equipment influence efficiency?
purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality
how does organisational restructuring influence efficiency?
reducing the level of staff/reorganising staff can better match labour to output needs
delayering reduces labour costs as levels of management are removed
re-deployment can motivate workers by providing opportunities for staff to take on a new role which will develop their skills/experience
how does outsourcing influence efficiency?
tasks may be given to other specialist business that can complete it at a lower cost
outsourcing allows a business to focus on improving the efficiency of its core competences
how does an adoption of lean production techniques influence efficiency?
an approach to production that involves the reduction of all types of wastage (time, resources, space)
kaizen : improvements are made continuously
just in time (JIT) : holding little/no stock which minimises storage costs
labour intensive production (def.)
production relies heavily on workers and employees
labour intensive production adv.
low cost production where labour costs are low
provides workers with opportunities to be creative
workers are flexible
labour intensive production dis.
workers may be unreliable - need regular breaks
incentives (financial and non-financial) may be needed to motivate staff
training costs can be significant
capital intensive production (def.)
production relies heavily on machinery and equipment
capital intensive production adv.
low cost production where output is high
machines are usually consistent and precise
machines can run without breaks
capital intensive production dis.
significant set-up and maintenance costs
breakdowns can severely delay production
