Business operations Flashcards
Define economies of scale
*Cost advantages that a business achieves by increasing its scale of production
*As a business grows and produces more, it can often lower its average cost per unit of output.
internal economies of sale
falling average total costs as
output increases
external economies of sale
falling average total costs due to
external factors
diseconomies of sale
limits of growth
Methods of production
- job
- batch
- flow
describe job production
*items are made individually
*products can be tailored
*item finished before starting next one
advantages and disadvantages of job production
+
* can charge more
*tailor orders for customer needs
-
*takes more time to produce
* production cost high
describe batch production
- products made in groups
- each batch finished before next one started
advantages and disadvantages of batch production
+
*multiples of product made - cost efficient
*flexible production
-
*can be expensive
*often leads to the accumulation of stock
describe flow production
- identical products made on an assembly line
*products are standardised
advantages and disadvantages of flow production
+
*continuous, more
* reducing labour costs
