4.1 Production of goods and services

Question 1

define added value

Answer 1

Value Added = Final Selling price - Cost of inputs
everything business does to make customers pay more than they would for components parts, creates by undergoing production process

Question 2

define lean production

Answer 2

the production of goods and services with the minimum waste of resources e.g: Kaizen, just in time

Question 3

describe and explain just-in-time inventory control

Answer 3

when businesses don’t hold any inventories and raw materials and components arrive from suppliers just when they are needed in the production processes. reduces warehousing costs but the business must have a good relationship with the supplier in order to achieve this

Question 4

describe and explain Kaizen

Answer 4

when workers suggest improvements that can be made to speed up the production process and to manufacture products efficiently. The changes made by each worker is very small but these small changes can lead to big improvements.

Question 5

benefits and limitations of job production

Answer 5

Benefits
- Unique, high quality products are made
- Workers are often more motivated and take pride in their work
Limitations
- Uses skilled labour rather than machinery so selling prices are usually higher
- Product can take a long time and can be expensive
- Economies of scale are not possible

Question 6

benefits and limitations of batch production

Answer 6

Benefits
- Since larger numbers are made, unit costs are lower
- Offers the customer some variety of choice
- Materials can be bought it bulk so it is cheaper
Limitations
- Workers are often less motivated because the work become repetitive
- Goods have to be stored until they are sold, which is expensive

Question 7

benefits of flow production

Answer 7

Benefits

• More capital intensive (production process uses a high quantity of capital equipment compared with labour input) which lowers labour cost
• Materials can be purchased in large quantities, so they are often cheaper due to bulk-buying. Which means economies of scale can be achieved
• Large number of goods are produced

Question 8

limitations of flow production

Answer 8

Limitations

• Requires very large capital investment in production line
• Workers are not very motivated, since their work is very repetitive
• It is not a very flexible method as production lines are difficult to change
• If one part of the production line breaks down, the whole production process will have to stop until it is repaired
• High levels of raw material, work in progress and finished goods inventories are held. This increases business cost

Question 9

How technology has changed production methods

Answer 9

• makes no mistakes
• no breaks
• work in dangerous environment
  but
  -maintenance cost
  -high set up cost