2.4.1 production, productivity and efficiency Flashcards
what is capital intensive?
production methods that make more use of machinery relative to labour.
define capital productivity?
the amount of output each unit of capital (e.g one machine) produces
what is downsizing?
the process of reducing capacity, usually by laying off staff
what is kaizen?
a Japanese term that means continuous improvement
what is labour intensity?
production methods that focus and are more labour than machinery. the higher the labour costs, the more labour intensive it is
what is lean production?
an approach to operations that focuses on the reduction of resources they use.
what is outsourcing?
giving work to subcontracts to reduce costs
what is standardisation?
the process of making something conform to a standard
what is job production?
where items are made individually and each item is finished before the next one is started. e.g hairstylist
pros and cons of job production?
\+ high flexible and bespoke \+ high quality products \+ high profit margins - high unit costs - labour intensive
what is batch production?
where groups of item are made together, each batch is finished before starting the next block of goods. e.g baked goods
pros and cons of batch production?
+ flexible production
+ high economies of scale
- can be expensive
- may have additional costs
what is flow production?
where identical standardised items are produced on an assembly line. e.g bicycle production
pros and cons of flow production?
\+ very low unit costs \+ high levels of productivity \+ quick and cheap - huge set up costs - low motivation of workers
what is cell production?
when a single product will go through a number of stages
pros and cons of cell production?
\+ workers are more motivated \+ minimal waste \+ production is flexible - long process to find specific, skilled employees - may have to invest materials
define efficiency
how well a business limits the amount of waste it produces and therefore reduces average cost per unit
what is the calculation for efficiency?
unit costs = total cost
_________
total output
what factors affect efficiency?
- standardisation
- outsourcing
- relocating
- delayering
what are the benefits of improved efficiency?
- labour productivity increases
- unit costs fall
- profit margins increase
- more flexibility
how can businesses reduce waste?
- too much stock
- over production
- over processing
- defects
define capacity utilisation?
the use that a business makes of its resources
what is excess or surplus capacity?
when a business has too many resources, such as labour and capital than its desired level of output
what is over capacity utilisation?
when a business is running at full capacity
what is under capacity utilisation?
the position where a business is producing at less than full capacity
what are the implications of working under capacity?
- unit costs rise
- unmotivated staff - no work to do
- can ruin brand image
- business may need to rationalise
+ opportunities for growth
what are the implications if working over capacity?
- employees are overworked and unhappy
- mistakes are more likely
- unit costs rise
- can damage brand image
+ opportunities for growth
how do you calculate capacity utilisation?
current output
______________ X 100
maximum output
how do you improve capacity utilisation?
- increase demand through price cut and promotion
- staff redundancies
- sell of assets
- could lease out capacity to other businesses
how do you decrease capacity utilisation?
- rationalisation
- subcontract in work from other businesses
