5.2 Operations methods Flashcards
Job Production
-Is the output of a customised good or service that meets the specific needs of a specific customer. This production method involves the output of unique or one-off orders.
-Highly labour-intensive as it requires highly skilled workers
Advantages of Job Production
It is the most flexible production method, allowing output to be catered to the specific requirements of the customer.
Due to its uniqueness and exclusivity, the production of the good or service is of an exceptional quality standard.
This also means that a premium price can be charged, and thus higher profit margins can be gained.
Disadvantages of job production
High labour costs and limited opportunities for economies of scale mean that job production can be very expensive.
Long production times are required as job production cannot rely on technologies used for mass-produced, non-standardised output to meet the specific needs of individual customers.
Batch Production
Method of production that involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch.
Advs of Batch Production
Average costs of production are lower than if job production is used, because batch production enables the organisation to have greater economies of scale. Fewer workers are needed as there is a reliance on machinery and mechanisation.
As a variety of products are made, customers have a greater choice, –> higher sales
It reduces and spreads the risks associated with concentrating on the output of a single product.
Disadvs of Batch Production
less flexibility for customers, compared with job production, as they can only select from a range of standardised outputs.
A greater need for capital expenditure, such as the purchase of machinery and capital equipment. There is also a greater need for working capital as the business needs to purchase a lot more stock
Reliance on machinery and automation for batch production means that technical problems or breakdowns would be costly
Mass (flow) production
-Is an operations method whereby different operations are continuously and progressively carried out in sequence, with a very large output of standardised products.
-Highly capital-intensive
Capital Intensive
-Refers to the manufacturing of a good or provision of a service that relies mainly on the use of machinery and capital equipment,
Advs of mass production
As products are mass-produced, the business benefits from economies of scale, i.e., lower costs per unit of output. –> Lower prices and higher profit margins.
Automation results in lower labour costs as fewer people need to be hired, and for shorter periods.
As production is capital-intensive, a large volume can be created, and often continuously, on the production line.
Disadvantages of mass production
Due to the standardised output of mass-produced goods and their relatively low prices, the firm earns lower profit margins.
Almost no flexibility with mass production because large quantities of standardised (identical) goods are produced.
Start-up costs are likely to be high, especially for new businesses, because of the amount of capital expenditure needed.
Mass Customisation
-It is an operations method that combines the benefits of mass production (such as economies of scale) with the personalisation of job production.
Disadvs of Batch Production
There is less flexibility for customers, compared with job production, as they can only select from a range of standardised outputs.
There is a greater need for capital expenditure, such as the purchase of machinery and capital equipment. There is also a greater need for working capital as the business needs to purchase a lot more stock
Reliance on machinery and automation for batch production means that technical problems or breakdowns would be costly
Mass (flow) Production
is an operations method whereby different operations are continuously and progressively carried out in sequence, with a very large output of standardised products.
-Highly capital-intensive
Capital Intensive
-Refers to the manufacturing of a good or provision of a service that relies mainly on the use of machinery and capital equipment.
Advs of mass production
As products are mass produced, the business benefits from economies of scale, i.e., lower costs per unit of output.
Automation results in lower labour costs as fewer people need to be hired, and for shorter periods of time.
As production is capital-intensive, a large volume can be created, and often continuously, on the production line.
Disadvs of mass production
Due to the standardised output of mass-produced goods and their relatively low prices, the firm earns lower profit margins.
There is almost no flexibility with mass production because large quantities of standardised (identical) goods are produced.
Start-up costs are likely to be high, especially for new businesses, because of the amount of capital expenditure needed.
Mass customisation
-It is an operations method that combines the benefits of mass production (such as economies of scale) with the personalisation of job production.
Advs of mass customisation
Mass customisation offers greater choice for customers and a higher degree of customer satisfaction, and hence can create competitive advantages for the business.
flexibility of mass customisation enables far more customers to have their individual needs and preferences met.
Enables the business to enjoy higher profit margins due to the premium prices charged for mass customised products.
Disadvantages of mass customisation
Mass customisation relies on creating more options to entice customers, but such investments can be highly expensive for the business.
Greater need for effective stock control (inventory management), which can be both time-consuming and costly for the business.
It can be challenging to forecast sales and trends due to the wide range of options made available to customers.
