2D Flashcards
What is productivity
Is the output per input per hour
What is production
Is the total amount of output that is produced in a time period
4 methods of production
Job, batch, flow, cell
What is job production and p and n
Is where one single product is made at a time, products are made for a specific client or customer
p-Bespoke, unique, higher prices charged, more skilled laborers
n- Skilled labour is expensive, hard to speed up if demand increases.
What is batch production and p and n
This is the production method used when a business wants to make more than one item at a time. Goods are made in batches and can be switched over to make something diff on the same production line.
p- more productive, less capital will be required to set up the process compared to flow production, Flexible so different quantities can be produced allowing them to meet different sized orders.
n- Lots of stock- waste, less efficient than flow
What is flow production p and n
Flow production uses production lines with continuous movements of items through the process. Many mass-produced products are produced this way such as coke.
p-economies of scale, more productive
n-not as much flexibility and expensive machinery
What is cell production p and n
Cell production is dividing up a production line into sperate self-contained areas that are each responsible for a section of work.
p-Wastage through movement of materials is reduced. Time waiting for stock to arrive is reduced. Bottlenecks in the production process are reduced, increased motivation.
n- Any break down of machinery will stop production, expanding may be difficult due to lack of space.
Ways to improve productivity
Productivity bonus, productivity deal, investment in new machinery and equipment, staff training
What is a productivity bonus
Offering employees a bonus for increased productivity. Will increase costs for business so may not maximize efficiency.
What is a productivity deal
Union in a business may negotiate a productivity deal for all staff
Factors influencing efficiency
Firms that have a higher output per employee are more efficient, this can lead to comp advantage as prices per item made are lower than the competition.- the business can become a market leader through low prices or enjoy high profits due to lower production costs. An efficient factory production line will be producing the right scale of products to achieve economies of scale and avoid diseconomies of scale.
What is capacity
The highest sustainable level of production that can be achieved with the current level of resources
What is capacity utilisation
current output/maximum possible output times 100
Why is capacity important
-Businesses don’t want resoruces sat idle - fc increased
-Ensuring that resources are used efficiently will help a business to maximize profits
-Unwise for business to be operating at full capacity all the time, as some downtime is required for maintenance, staff morale will also suffer if they are constantly working flat out. Can look for more profitable oppotunities
How to increase capacity
ST- Change shift patterns, extend opening hours, employ temporary staff, use overtime
LT- Expands the business, invest in more/better equipment
How to decrease capacity
ST-stock pile, reduce prices
LT-Redundances, closing branches
Maximum stock level
most stock a firm is able or willing to hold
Re-order level
The stock level at which a new order will be sent to supplier
Buffer stock
The stock is held in reserve for unexpected events.
Lead time
The time between an order being placed, and the goods being received
Holding too much stock
-Costs money, storage costs, higher insurance.
-Increased risk of shrinkage
Increased risk obsolescence and wastage
-could create a cash flow problem.
Not holding enough stock
-May lead to a loss of sales, which in turn can lead to a loss of customers.
-Could damage the reputation of no business-leading to a loss of goodwill
and longer lead time for customers.
What is lean management
Based around the idea of doing more with less- in other words minimising waste
Ways of achieving lean management
reduce lead times of production- reduces the wait that customers have between ordering and receiving products- which increases customer satisfaction, reduces the need to hold stocks-since the business can respond to market changes more quickly
What is JIT stock management
A method of managing production that involves holding minimum stocks in order to maximise efficiency
What is JIT stock management?
A method of managing production that involves holding minimum stocks in order to maximize efficiency. Components are delivered just as they are required so the cost of holding stocks are removed.
P and n of JIT management
p- improved cash flow -money is not tied up in stocks. Less risk of wastage, shrinkage, and obsolescence. More production space is available. Better relationships with suppliers.
n-Very dependent on suppliers, increased administration costs since orders are made.
What is quality
Minimum acceptable standard- so can affect consumers purchasing decisions. There is usually a trade-off between price and quality- higher quality, higher prices.
What does high-quality lead to
Increased customer loyalty, fewer complaints, larger product life cyle, reduced promotional costs, charge higher prices.
What does low-quality lead to
Poor reputation, poor product placement, shorter product life cycles, higher promotional costs, having to reduce prices.
What is total quality management
Development of a new culture within a business- Everyone is considered to be responsible for quality and different departments in business are treated as internal customers
What is quality assurance
Prevents problems in the first place, can be achieved through TQM
What can quality assurance be achieved through
Quality circles, Benchmarking and kaizen.
What are quality circles
Created in Japan, small group of workers meet to discuss quality in business.- Depends how well invested these people are in the business.
What is Benchmarking
Comparing to other operations who are better and copying.
What is kaizen
Means continuous improvement. Believes small and regular change is good. Drastic but infrequent change is bad.
