2.4.1 production, productivity and efficiency

Question 1

definition of production

Answer 1

the process of transforming inputs into outputs

Question 2

definition of job production

Answer 2

one-off production of a product, made to customers specifications

Question 3

advantages of job production

Answer 3

high quality good/service

motivated and highly skilled workers

customer requirements and changes can be handled

Question 4

disadvantages of job production

Answer 4

labour costs are high

production is slow

unit cost may be high

Question 5

definition of batch production

Answer 5

similar items produced together as a batch

Question 6

advantages of batch production

Answer 6

workers can specialise

cost savings can be achieved (buying in bulk)

allows a firm to handle unexpected orders

Question 7

disadvantages of batch production

Answer 7

requires careful coordination to avoid shortages

money is tied up in stock

tasks may become repetitive - reducing motivation

Question 8

definition of flow production

Answer 8

products move continuously through each production process without stopping

Question 9

advantages of flow production

Answer 9

low costs per unit due to economies of scale

rapid production - suitable for manufacturing of large quantities

capital intensive - can work constantly

Question 10

disadvantages of flow production

Answer 10

worker motivation may be decreased - repetitive tasks

customisation is difficult - goods are mass produced

capital equipment can be expensive

Question 11

definition of productivity

Answer 11

measures the relationship between inputs and outputs within the production process

Question 12

production NN

Answer 12

the total amount of output pr

Question 13

definition of labour productivity

Answer 13

a measure of the output per worker during a specified period of time

Question 14

labour productivity formula

Answer 14

labour productivity = output / number of workers

Question 15

definition of capital productivity

Answer 15

a measure of the output of capital employed (e.g. machinery) during a specified period of time

Question 16

capital productivity formula

Answer 16

capital productivity = output / number of machines

Question 17

what is the link between productivity and competitiveness?

Answer 17

increased productivity = lower unit costs = higher profit margins = better competitiveness

Question 18

how does employee motivation influence productivity?

Answer 18

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

Question 19

how does skills, eduction and training staff influence productivity?

Answer 19

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

Question 20

how do business organisation and working practices influence productivity?

Answer 20

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

Question 21

how does investment of capital equipment influence productivity?

Answer 21

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

Question 22

definition of productive efficiency

Answer 22

the lowest unit cost at which production can take place

Question 23

definition of unit cost

Answer 23

the cost of making one product

Question 24

average unit cost (AUC) formula

Answer 24

AUC = total production costs / output

Question 25

how does the standardisation of the production process influence efficiency?

Answer 25

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

Question 26

how does relocation/downsizing influence efficiency?

Answer 26

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

Question 27

how does investment in capital equipment influence efficiency?

Answer 27

purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality

Question 28

how does organisational restructuring influence efficiency?

Answer 28

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

Question 29

how does outsourcing influence efficiency?

Answer 29

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

Question 30

how does an adoption of lean production techniques influence efficiency?

Answer 30

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

Question 31

labour intensive production (def.)

Answer 31

production relies heavily on workers and employees

Question 32

labour intensive production adv.

Answer 32

low cost production where labour costs are low

provides workers with opportunities to be creative

workers are flexible

Question 33

labour intensive production dis.

Answer 33

workers may be unreliable - need regular breaks

incentives (financial and non-financial) may be needed to motivate staff

training costs can be significant

Question 34

capital intensive production (def.)

Answer 34

production relies heavily on machinery and equipment

Question 35

capital intensive production adv.

Answer 35

low cost production where output is high

machines are usually consistent and precise

machines can run without breaks

Question 36

capital intensive production dis.

Answer 36

significant set-up and maintenance costs

breakdowns can severely delay production