2.4.1 Production, Productivity, Effciency

Question 1

Methods of production

Answer 1

• job
• batch
• flow

Can take place in different ways depending on type and quantity required of product

Question 2

Production

Answer 2

The transformation of resources into goods or services

Question 3

Production process

Answer 3

1. Input (primary) resources, C.E.L.L
2. Production /Transformed (secondary) processing, manufacturing , fabrication
3. Output (tertiary) goods/service, wastage, by-products

Question 4

C.E.L.L

Answer 4

Capacity
Equity
Land
Labour

Question 5

Factors affecting which method of production chosen

Answer 5

1. capital required
2. scale/output/type of business
3. availability/supply of skilled labour
4. demand/nature/type of product

capital
business
labour
product

Question 6

Job production:

Answer 6

specific requirements of customer

• labour intensive - high quality
• unique, individuals, tailor made

E.g. wedding cake/dress, architecture

Question 7

Adv & Dis of job production

Answer 7

ADV;
tailored = price
interesting = motivate

DIS:
cpu high (high skill, low production rates)
high pay

Question 8

Batch production

Answer 8

groups = series of tasks performed on each group

E.g. food industry (money is in stock)

• concentrate skills
• capital intensive
• better use of equipment = good quality products more economically than manufacturing

Question 9

Adv & Dis of batch production (4 THINGS)

Answer 9

ADV:
variation in product
quicker than job

DIS:
more costly than job (specialist machinery)
cpu higher than flow (machines adjust between batches)

Question 10

Flow/Mass production

Answer 10

• identical product continuously (no stopping=shift work) , assembly line
• mass market products
• high automated

E.g. drinks and tvs and mobile phones

Question 11

ADV & DISs of Mass/flow production

Answer 11

ADV:
unit labour costs low
huge volumes = meet huge demand mass mkt

DIS;
high initial costs (production machinery)
identical products (no tailoring)
interruptions in assembly line = down time

Question 12

Obsolete

Answer 12

When something is producing no value to the business

Question 13

Specialisation

Answer 13

work is divided into separate tasks or jobs

allow workers to become skilled at one of them

Question 14

Productivity formulae

Answer 14

Outputs divided by input per time period

Question 15

How does a business growing affect production? (4 THINGS)

Answer 15

1. employee staff/invest in machinery = capital intensive
2. scale of production increases
3. invest in new factories
4. consider off-shoring

Question 16

Production in action

Answer 16

• business may use a combination of all 3 types of production
• at different times
• depends on products/customer needs

Question 17

Which production method is best for growing a firm depends on: (4 THINGS)

Answer 17

1. target market
2. technology
3. resources
4. standards

Question 18

CELL

Answer 18

teams
each cell= responsibility for production of complete units of output
(work as team-achieve)
-set contained cells
-members work as team ensue quality and goals met

Question 19

ADVS & DIS of CELL production

Answer 19

ADV:

1. ideas generated in cell for improvements in process (communication)
2. small highly skilled = adjust product to suit customer needs = productivity
3. ownership = motivation

DIS:

1. reliant on people = high costs
2. lower production volumes than flow
3. conflicts
4. managers resent giving away authority

Question 20

Concept of LEAN production & ways of becoming lean

Answer 20

Japanese approach to production focused on eliminating all forms of waste (looking at ways of improving)

1. CELL
2. JIT
3. Kaizem
4. TQM

Question 21

Lean production principals

Answer 21

• pull system
• one piece flow
• tact (how to manufacture to reach demand)
• zero defects (self assurance/ self check)

Question 22

Productivity

Answer 22

• important measure of efficiency
• how many outputs produced from a given number of inputs over a period of time

Output/units of labour over time period (divided by)output/units of capital

Question 23

How to minimise input without decreasing output

Answer 23

• efficient workers
• training
• motivate staff (non financial and financial incentives)
• become more capital intensive

Question 24

How to increase output without increasing input

Answer 24

• reduce waste - efficiency
• increase capital intensity
• change method of production

Question 25

How to improve productivity

Answer 25

- capital intensive - motivate/train staff (expensive/may not improve productivity) - lean production - better capital equipment (demotivate workers = replaced) - better quality raw materials - reduce time waste on rejected - improved organisation (may resist changes = fear of job loss)

Question 26

Factors influencing productivity

Answer 26

- demand to be fulfilled - leadership style - working conditions - training levels - amount of capital to invest - type of business/how capital intensive

Question 27

Link between competitiveness and productivity

Answer 27

2 types of competitiveness: 1. PRICE (closer link):more likely in dynamic/competitive markets where cost of production is priority 2.NON PRICE; more likely in Monopoly/Oligopoly markets where production differentiation is a priority

Question 28

Monopoly market

Answer 28

market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.

Question 29

Oligopoly market

Answer 29

small number of firms, none keep the others significant influence monopoly = 1 duopoly = 2 oligopoly two or more

Question 30

Efficiency

Answer 30

Production at lowest unit cost | Acpu calculated; total production cost in period divided by total output in period (units)

Question 31

Acpu

Answer 31

Average cost per unit

Question 32

Economies of scale

Answer 32

Factors that cause Acpu (efficiency) to fall as output increases

Question 33

MES;

Answer 33

Minimum efficient scale - point where you are most efficient - most output for lowest cost

Question 34

Economies of scale matter because

Answer 34

- impact firms competitiveness - lower interest rates for larger amounts - increase profit by :reducing unit cost (more funds for investment or owners) Or reduce price (more sales, passing reduced cost onto consumer) = barrier to entry for other firms wishing to enter market

Question 35

Diseconomies of scale

Answer 35

Factors that cause acpu to rise as output increases

Question 36

Why do bigger businesses start to experience problems

Answer 36

1. communication 2. objectives 3. motivation/support 4. internal politics - communication is harder = mistakes = reduces productivity - diff branches/departments = own obj - motivation is lower = less supported (mistakes could affect productivity) - cause internal politics

Question 37

How to combat diseconomies of scale

Answer 37

-invest in electronic forms of communication - more staff to control, have regular communication times -rewards (performance related pay), appraisal performance review, -non financial = training, team building social events Fringe benefits.(e.g. company car) management by objectives

Question 38

Increase efficiency

Answer 38

- efficient resource allocation - adapt production (LEAN) - no waste (JIT production) - capital intensive (nw technology) - incentives = motivation - lower cost per unit (bulk buy) - introduce standardisation - outsourcing - delayering, downsizing, relocating