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A Level Business Theme 2 > 2.4.1 Production, Productivity, Effciency > Flashcards

2.4.1 Production, Productivity, Effciency Flashcards

1
Q

Methods of production

A
  • job
  • batch
  • flow

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

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2
Q

Production

A

The transformation of resources into goods or services

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3
Q

Production process

A
  1. Input (primary) resources, C.E.L.L
  2. Production /Transformed (secondary) processing, manufacturing , fabrication
  3. Output (tertiary) goods/service, wastage, by-products
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4
Q

C.E.L.L

A

Capacity
Equity
Land
Labour

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5
Q

Factors affecting which method of production chosen

A
  1. capital required
  2. scale/output/type of business
  3. availability/supply of skilled labour
  4. demand/nature/type of product
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6
Q

Job production:

A

producing items = specific requirements of customer

  • labour intensive - high quality
  • one off and one at a time
  • unique, individuals, tailor made

E.g. wedding cake/dress, architecture

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7
Q

Batch production

A

products are made in 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
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8
Q

Flow/Mass production

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

E.g. drinks and tvs and mobile phones

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9
Q

ADVs of Mass/flow production

A
  1. reduced human error - efficient
  2. specialised at their role/job = less training
  3. cost/unit production reduced (improved work/material flow)
  4. manufacture large quantities
  5. capital intensive = work constantly
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10
Q

DISs of mass/flow production

A
  1. motivation = job security/redundancy &repetitive task
  2. training
  3. interruptions =delay whole line = loss production time = delay to customer = could have lots of waste ==down time
  4. need investment =maintenance, depreciation =obsolete, manage robot= training & safety gear
  5. stressful environment
  6. random quality checks (some missed, waste, quality controlled inspector)
  7. long set up/reliant on high quality machinery
  8. cash flow issues
  9. high raw materials unless use lean = waste
  10. less differentiation/inflexible product
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11
Q

Obsolete

A

When something is producing no value to the business

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12
Q

Specialisation

A

When work is divided into separate tasks or jobs that allow workers to become skilled at one of them

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13
Q

Productivity formulae

A

Outputs divided by input per time period

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14
Q

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

A
  1. employee staff/invest in machinery = capital intensive
  2. scale of production increases
  3. invest in new factories
  4. consider off-shoring
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15
Q

Production in action

A
  • business may use a combination of all 3 types of production
  • at different times
  • depends on products/customer needs
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16
Q

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

A
  1. target market (customer demand)
  2. technology (production automated)
  3. resources (finance/people to be able to use flow
  4. standards (quality required)
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17
Q

Advs of job production

A
  • customer requirements handled
  • high quality = high price
  • motivated employees = more job satisfaction
  • flexible production method
18
Q

Dis of job production:

A
  • individual cost per unit = high
  • labour intensive = high labour costs
  • close consultation with client
  • reliant on high skill
19
Q

Advs of batch production (4 THINGS)

A
  1. cost saving (buying in bulk)
  2. customers some choice
  3. specialist staff/equipment to work with products
  4. handle unexpected orders
20
Q

Dis of batch production

A
  • time to switch production of one batch to another
  • maintain higher stocks raw materials & work in progress
  • boring/repetitive = motivation decreases
  • size of batch dependant on capacity allocated
21
Q

CELL

A

Work is organised into teams each cell takes responsibility for production of complete units of output (work as team-achieve)

  • set contained cells
  • each cell = responsibility for production of complete units of output
  • members work as team ensue quality and goals met
22
Q

ADVS of CELL production

A
  • improved productivity - increase motivation
  • efficient use of space
  • team=flexibility =ownership
  • multi skilled = productive
  • better communication
23
Q

DIS of CELL production

A
  • conflicts
  • managers resent giving authority
  • small scale = not enough savings to make switch worthwhile
  • have enough work but not too much allocated
  • not allow as much machinery use as traditional flow
  • invest in new materials-handling/ordering systems suitable for CELL
24
Q

Concept of LEAN production & ways of becoming lean

A

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

  1. CELL
  2. JIT
  3. Kaizem
  4. TQM
25
Q

Lean production principals

A
  • pull system
  • one piece flow
  • tact (how to manufacture to reach demand)
  • zero defects (self assurance/ self check)
26
Q

Productivity

A
  • 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

27
Q

How to minimise input without decreasing output

A
  • efficient workers
  • training
  • motivate staff (non financial and financial incentives)
  • become more capital intensive
28
Q

How to increase output without increasing input

A
  • reduce waste - efficiency
  • increase capital intensity
  • change method of production
29
Q

How to improve productivity

A
  • 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)
30
Q

Factors influencing productivity

A
  • demand to be fulfilled
  • leadership style
  • working conditions
  • training levels
  • amount of capital to invest
  • type of business/how capital intensive
31
Q

Link between competitiveness and productivity

A

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

32
Q

Monopoly market

A

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.

33
Q

Oligopoly market

A

is a market structure with a small number of firms, none of which can keep the others from having significant influence

A monopoly is one firm, a duopoly is two firms and an oligopoly is two or more firms.

34
Q

Efficiency

A

Production at lowest unit cost

Acpu calculated; total production cost in period divided by total output in period (units)

35
Q

Acpu

A

Average cost per unit

36
Q

Economies of scale

A

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

37
Q

MES;

A

Minimum efficient scale

  • point where you are most efficient
  • most output for lowest cost
38
Q

Economies of scale matter because

A
  • 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
39
Q

Diseconomies of scale

A

Factors that cause acpu to rise as output increases

40
Q

Why do bigger businesses start to experience problems

A
  • communication is harder (repeat tasks, mistakes, wrong tasks) = alienated - reduces productivity
  • different branches/departments (uncoordinated, own objectives, moving away from corporate objectives - wasted resources)
  • motivation is lower (less personal contact from line manager) (span of control widens = feel less supported (mistakes could affect productivity)
  • cause internal politics
41
Q

How to combat diseconomies of scale

A

-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

42
Q

Increase efficiency

A
  • 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

A Level Business Theme 2 (25 decks)

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