2.4.1 Production, productivity and efficiency Flashcards
Explain job production
Individual products made one at a time to meet specific customer preferences
Give 2 cons to job production
- High cost
- Time consuming
Give 2 pros to job production
- High quality
- Orders customisable, higher prices
Explain batch production
Produces similar items in groups, stage by stage
Give 2 cons to batch production
- If demand decrease, risk waste of products
- High set up costs in machines
Give 2 pros to batch production
- Reduces unit costs more than job production
- Addresses specific customer needs
Explain flow production
Product created in series of stages on assembly line
Give 2 cons of flow production
- Higher set up costs than job production
- Repetitive work
Give 2 pros of flow production
- Cheaper operating costs than tailoring each Tim
- Structured material flow
Explain cell production
Divides workplace into ‘cells’ - each cell occupies an area of factory floor
What does cell production focus on the production of?
‘product family’ - group of products that requires sequence of similar operations
Define productivity
Output per input per hour
Define production
Volume of output a firm produces in specific amount of time
What is the formula for labour productivity?
output per time period/ inputs per time period or number of employees or hours worked
What is the formula for capital productivity?
Output per time period/ number of machines
How can a business increase productivity? (3)
Better quality raw materials
Employee training
Invest in more/ better capital
What is a pro + con of better quality raw materials?
pro - less waste of rejected products
con - costs likely to rise
What is a pro + con of increasing employee training?
pro - become quicker
con - cost/ time away from job
What is a pro + con of investing in more/ better capital?
pro - better machinery - increased output
con - expensive
What are 2 downsides to methods of increasing productivity?
- Workforce may be reluctant to learn
- Members of workforce may see changes that affect productivity as a threat to their job
What is labour intensive production?
People (labour) primarily used to produce the good or service
What is capital intensive production?
Machines primarily used to produce the good or service
Define efficiency
Measure of how well a business uses its resources to make its products or provide its service
How can a business become more efficient? (2)
- Increasing amount it outputs from same inputs
- Fewer inputs with same output
What are 2 pros of labour intensive production?
- Flexible
- Can tailor to customer requirements
What are 2 cons of labour intensive production?
- High average costs
- Low productivity
What are 2 pros of capital intensive production?
- Low cost per unit
- Little waste
What are 2 cons of capital intensive production?
- High start-up costs
- Standard product
What factors will businesses consider when choosing most appropriate method of production? (3)
Target market
Need for efficiency
Availability of cash
What is a link between productivity and competitiveness?
- High productivity enables lower prices + increased revenue
Why do firms concentrate on productivity as a method of becoming more competitive?
- Must increase productivity to meet demand and stay relevant
- Market has price elastic demand –> v. competitive + businesses need to reduce costs enough to compete
3 methods to improve efficiency:
- Use correct method of production
- Innovation - cost savers
- Encourage workforce to increase their production
