Assessment 2 Flashcards
Factors of productions
Land - The natural resources such as oil, water and the land its self.
Labour - The people employed by the business to make the product
Capital - The man made resources such as machines tools and factories.
Enterprise - the person who gather’s all 4 factors of production to make a product
Objectives of a business
Profit Maximisation - The aim is make as much money as possible out of the business. This is the most obvious objective but is hard to achieve along with other objectives.
Market Growth - To increase in market share. The business will have to accept lower profits as the the product are sold at a lower price.
Social responsibility - The business may want to improve their public image. They can do this buy showing that they are socially responsible.
hey may give money to good causes or spend money to avoid damaging the environment.
Factors to consider when choosing a supplier.
PRICE - the price of the supplies will have a direct effect on how much it costs the company to produce a product. Higher cost of raw materials will lead to a higher cost of production. If a company can find a cheaper supplier it could lead to increased profit.
QUALITY - The quality of the raw supply will have a direct effect on the businesses products. It is important source supplies of a high standard or it may affect your finished product and therefore your customer satisfaction.
STORAGE SPACE - The firm must ensure they stock manage to avoid making any mistakes and loosing money. Where the raw materials will be held is important a storage space can be expensive and the business will want to keep costs low to maximise profits.
RELIABILITY - The supplier needs to deliver as promised. Organisations depend on suppliers to deliverer on time. If a supplier does not deliver at the agreed time, or with the correct goods, this can affect a business’s ability to produce and deliver their product to the customer.
Problems related to overstocking
a great deal of cash it tide up as stock which is a very expensive item
Stock could be stolen
If social factors change, then stock might go to waste.
Problems related to under stocking
The business may not be able to cope with an unexpected orders if stocks are low. This may upset customers who may take their business somewhere else
If there are not enough stocks, production nay have to be stopped - machinery will be idle and sales may be lost
The firm may have to place orders more often - this causes high administrations costs and the firm may loose out on discounts for bulk buying.
Centralised Storage
Security is easier to install and maintain.
Procedures for receiving, issuing and distributing stock is easier to manage
Expensive to set up an maintain
Time can be wasted going to and from the storage area.
Decentralised storage
Stock can be accessed and easily obtained when required.
Less chance of stock going to waste or deteriorating
Storage space is required in several places
Security is more difficult to maintain so risk of theft is higher.
Flow production
Continuous process with the production flowing from one operation to the next. Each stage adds to the production. This type of production often uses a production line for mass production of goods to the same specification
Large quantity of the identical product can be made
Machinery can work 24/7
Product cannot be made to customers individual requirements
A fault or breakdown in one part of production line could stop production
Job production
This is where a company produces a single product or small number of products to specific requirements. It may be a one of job to suit a customers particular requirements.
Customers exact demands can be met/
High prices can be charged.
specialists tools or equipment may be needed
Production can take a long time to make
Batch Production
A number of products or batches of similar products are made. The products are similar but different ingredients may be used for different products. Generalist equipment is used to create large quantities of the product to meet a specific demand. The production process is stopped on completion of each batch. The work force usually divided into a group designated to work on a particular stage of the process. Batch production is commonly used in food production.
Batches can be changed to suit customer requirements.
Cost savings can be made compared to job production
A fault in one item can lead to the whole batch being wasted.
