4.3 - Increasing efficiency and productivity

Question 1

What is a disadvantage of a business running at 100% capacity utilisation?

Answer 1

Having capacity utilisation of 100% means the business cannot respond to additional or special orders made at short notice as they do not have any further capacity to produce these products.

Question 2

What is lean production?

Answer 2

Lean production is the process of minimising waste to increase efficiency.

For example, if McDonalds redesigned their restaurant so that staff had less distance to walk between cooking appliances in the kitchen, time wastage will be reduced which improves efficiency and therefore productivity.

Question 3

What is just In Time production?

Answer 3

Just in Time is a form of lean production.

Just in time involves businesses only ordering supplies when they are needed, and therefore reduces waste.

Question 4

What is a disadvantage to JIT?

Answer 4

Just in Time means that businesses will have no spare stock to respond to an unexpected customer order which may affect customer satisfaction.

Question 5

What is a capital intensive business?

Answer 5

Capital intensive businesses are businesses that mainly rely on the use of capital, or machinery, in the production of goods and services.

Question 6

What is a labour intensive business?

Answer 6

Labour intensive businesses are those which mainly rely on the use of human labour in the production of goods and services.

Question 7

Pros and cons of capital intensive production.

Answer 7

Pros:
Capital intensive production can be cheaper than labour-intensive production in the long-term.

Cons:
Capital intensive production can require businesses to commit to high start-up costs as machinery is purchased.

Question 8

Pros and cons of labour intensive production.

Answer 8

Pros:
Labour-intensive production increases operational flexibility as people can be reassigned to different projects or retrained to complete different tasks.

Cons:
More expensive than long-term

Question 9

How can CAD and CAM benefit a business?

Answer 9

Computer aided design (CAD) can be used to increase efficiency as businesses can use technology to create and amend designs instead of doing these manually

Computer aided manufacture (CAM) can be used to increase efficiency as businesses can use CAD and CAM to create products.

E-commerce and email systems can increase efficiency as administrative tasks can be completed more quickly than they could using paper-based systems.