Business Operations: Unit 40 - 42 Flashcards
- What is economies of scale?
financial advantages(falling in average costs) of producing something in very large quantities.
- What is diseconomies of scale?
- rising average costs when a firm becomes too big.
- What is internal economies of scale?
cost benefits that an individual firm can enjoy when it expands.
- What are 6 reasons/ types of economies of scale?
- purchasing economies
-marketing economies - technical economies
- financial economies
- managerial economies
- risk bearing economies
- What is external economies of scale?
cost benefits that all firms in the industry can enjoy when the industry expands.
- What are the 4 reasons for external economies of scale?
- skilled labor
- infrastructure
- ancillary(less important but main part of services) and commercial services
- cooperation (when firms in the same industry are likely to cooperate with each other)
- What are the reasons for diseconomies?(3)
- bureaucracy
- labor relations
- control and coordination
- What are the 4 barriers that might prevent a business from growing in size?
- lack of finance.
- nature of the market.
- lack of managerial skills.
- lack of motivation.
- What is bureaucracy?
system of administration that uses a large number of departments and officials.
- What is ancillary?
- are services that are connected with something but less important than the main part of it.
- What is a scale?
size of business.
- What is production?
- the transformation of resources into a final product.
- What are the 3 methods of production?
- job production
- batch production
- flow production
- What is job production?
method of production that involves employing all factors to complete one unit of output at a time.
- What is batch production?
- method that involves completing one operation at a time on all units before performing the next/
- method that involves completing the production of a number of products to the same design and then to another product of a different design.
- What is flow production?
large-scale production of a standard product, where each operation on a unit is performed continuously one after the other, usually on a production line.
- What are the 4 features of flow production?
- large quantities are produced.
- a standardized product is produced.
- a semi-skilled workforce.(specializing in one operation only is employed)
- large amounts of machinery and equipment are used.
1. * **
- What is another form of flow production? define it.
process production:- a form of flow production where materials pass through a plant and a series of processes are carried out in order to change the product.
19 What are two types of production?
- labor-intensive production
- capital intensive production
- What is labor- intensive production?
production methods that make more use of labor relative to machinery.
- What is capital-intensive production?
production methods that make more use of machinery relative to labor.
- What are the four advantages of job production?
- Value added product tailor-made for the customer.
- high level of customer satisfaction
- can be sold for a premium price
- increased job satisfaction.
- What are the four disadvantages of job production?
High avg. cost of production, no economies of scale.
time-consuming because you’re tailoring the job
A wide range of tools, machinery, and equipment required
Highly skilled labor is required
Workers demand high pay
- What are the 3 advantages of batch production?
Economies of scale – lower average cost of production
- Division of labor and specialization
- Batches can be varied to meet customers’ needs.
- What are the 4 disadvantages of batch production?
- High level of WIP and stock holding cost at the end of every process.
- Boring work – repetition of work therefore workers will be demotivated.
- More complex machinery maybe needed.
- Careful planning and co-ordination is needed
- What are the 4 advantages of flow production?
- It is the high output of standardized product
▪ Costs are lower leading to lower prices
▪ Goods are produced quickly and cheaply
▪ Automated production lines can operate 24 hours a day
- What are the 4 disadvantages of flow production?
▪ Very expensive machinery is required. Start-up capital cost is high.
▪ Worker motivation can be low – repetitive tasks.
- Takes a long time to set up the machines to make a product.
▪ Breaks in production can be very expensive
- What is productivity?
- the rate at which goods are produced and the amount produced, in relation to the work, time and money needed to produce them.
- What is labor productivity?
- output per worker in a given time period.
- How to calculate labor productivity?
Total output/ no. of workers
- How to calculate capital productivity?
total output/ capital employed
- What is flexitime?
system in which people work a fixed number of hours each week or month, but change the times at which they start and finish each day.
- What are the four ways labor productivity be improved?
- government invests more in education by providing more equipment.
- People are better motivated at work.
- Labor is organized and managed more effectively
- Labor is more flexible.
- What are the 4 ways to increasing productivity of capital?
- downsizing
- relocation
-outsourcing - lean production
- What is downsizing?
- a process of reducing capacity, usually by laying off staff.
- What is outsourcing?
- contracting out of work that might otherwise have been performed within the organization to other businesses.
- What are the 4 impacts on business of productivity improvements?
(as a result of efficiency)
- financial impact
- competitiveness
- workforce
- customers
- What is lean production?
- an approach to production aimed at reducing the quantity of resources used.
- What are the 4 benefits of lean production?
- raises productivity
- reduces costs and cuts lead times
- reduces the number of defective products
- improves reliability and speeds up product design.
- What is just-in-time?
- a production technique that is highly responsive to customer orders and uses very little stock holding.
- What are the 6 advantages of JIT?
- cash flow is improved.
- no waste, out of date or damaged stock
- space is released
- no stock holding costs
- Stronger links with suppliers
- fewer suppliers
- What are the 5 disadvantages JIT?
- high ordering and administration costs
- relies hugely on suppliers’ reliability
- advantages of bulk- buying may be lost.
- hard to cope with changes in demand
- vulnerable to a break in supply.
- What is tailor made?
- where a product has been designed so that is exactly right for someone’s needs.
- What is stockpile?
- a large supply of goods and so forth that are being kept for use or possible use in the future.
- What is Kaizen?
KAIZEN is a Japanese term meaning ‘continuous improvement’ through the elimination of
waste.
- What are the 3 examples of waste in Kaizen?
- time wasted while staff waits around.
- time wasted when workers move unnecessarily in the workplace.
- the irregular use of a machine.(using once a month)
- What are the 5S?
- Sort - get rid of clutter
- Set in order - organize the work area
- Shine- work area and equipment are clean
- Standardize - adopt effective working practices,
- Sustain - adopt the systems of 4s
- What are the 6 practices adopted as a result of kaizen?(SSTEMQ)
- standardization
- teamworking
- empowerment
- suggestion schemes
- quality circles
- multi-skilling
- What are the 4 benefits of teamworking?
- workers develop team spirit may improve motivation and productivity.
- flexibility might improve.
- Quick decision-making and more ideas
- Communication and labor relations might also improve.
- What is empowerment?
-is when workers in a company are given more responsibility by being allowed to organize their own work and make decisions without asking their managers.
- What are quality circles?
small group of factory workers who meet regularly to discuss ways to improve working methods and to solve problems.
- What are the 4 importance of using resources effectively/ lean production?
- financial benefits
- improved competitiveness
- positive environmental effects.
- improved customer service.
