chapter 18 Flashcards
define production
converting inputs(resources) into outputs(goods/service)
define productivity
ratio of output into input during production, this is a measure of efficiency
how is productivity measured
labour productivity=output/no. of employees
how to raise productivity level
1.Train workers-> more skilled-> more flexible->more productive->so more efficient. However , this is time consuming and workers can leave after training
2.motivation->workers will feel invested in->willing to invest more time into the business->more productive->higher efficiency. However business focus on non financial methods as financial methods will raise cost per unit
3.introduce automation->higher output levels->machinery can work 24 hours->very high productivity. However, may need to make workers redundant, so less
job security for remaining workers, need large capital
benefits of increasing efficiency/ productivity
1.lower cost per unit->better profitability
2.fewer workers needed->lower wage costs
does raising productivity always guarantee success?
no.
1.the product may not be in demand
2.poor quality management
3.if the workers are working efficiently they may demand higher wages
define efficiency
best use of resources
define effectiveness
meeting the objectives to meet customer’s needs
how is efficiency measured
1.measuring productivity
2.calculate average cost per unit
3.economics of scale
4.measure quality
how to improve efficiency
1.training staff
2.introducing automation
3.management of resources
4.maintaining quality
what are the methods of production
1.job production
2.batch production
3.flow/mass production
what is job production
when a single product is made at a time
what is batch production
a quantity of one product is made then a quantity of another product is made
what is flow/mass production
where large quantity of a product is produced in a continuous process
advantages of job production
1.products meet the exact requirements of customers->have ability to charge a higher price
2.workers have variety in job->more motivated
disadvantages of job production
1.very time consuming
2.need skilled labour->require higher salary->higher costs
3.labour intensive->wage costs are high
4.errors are expensive to correct
5.less chance of economies of scale
advantages of batch production
1.flexible way of working->easily change from one product to another
2.offer a variety of product->more customer choice->increase competitiveness
3.variety of worker’s job
4.production not greatly affected if any machinery breaks down
disadvantage of batch production
1.semi finished products will needing moving about>increase waste and cost
2.machines need to be reset between batches->delay production
3.warehouse space needed->costly
advantages of mass/flow production
1.high output of standardized product
2.capital intensive->small training to workers and can recruit unskilled workers->lower wage costs
3.opportunity of eos->decreasing costs>decrease price->higher sales
4.quick and cheap
5.operate 24 hours a day
disadvantages of mass/flow production
1.very boring for workers->demotivating
2.high capital costs
3.large storage requirements->high costs
4.if one machine breaks down production will stop
what are the factors affecting which method of production to use
1.nature of product
2.nature of demand
3.size of market
4.size of business
define inventory
all the materials and goods required to allow for the production and supply of products to the customer
what are the forms of inventory
1.raw materials
2.finished goods
3.work in progress
disadvantages of holding inventory
1.storage costs
2.risk of wastage
3.capital tied up in stock(affects liquidity position of the business)
disadvantages of not holding enough inventory
1.lost sales->unable to supply customers-customer dissatisfaction
2.idle production resources: if raw materials run out ->production process stops->cost of lost output and wasted resources
3.small order quantities->lose benefit of eos-> cost per unit increases. High transportation costs->frequent delivery
define lead time
time taken for goods to be delivered
buffer inventory level
inventory held to deal with unexpected customer demands and deliveries of supplies
what is lean production
Techniques used by businesses to cut down waste and increase efficiency.
benefits of lean production
1.less storage of inventories
2.less money tied up in inventories
3.quicker production
4.better use of production
5.reduce cost->lower prices->more competitive->increasing profits
lean production methods
1.just in time inventory control
2.kaizen
3.cell production
what is just in time inventory control
production method that aims to avoid holding inventories
requirements for just in time inventory control
1.excellent relationship with suppliers
2.efficient system of ordering
3.multi skilled workers
4.accurate demand forecast
5.motivated employees
disadvantages of just in time inventory control
1.any failure might lead to expensive production delays
2.delivery costs will increase, as there are frequent small deliveries
what is kaizen
japanese term meaning continuos improvement through the elimination of waste through the ideas of the workers
requirements of kaizen
1.management culture must be towards involving staff
2.team working
2.giving workers the power to take decisions(job enrichment)
limitations of kaizen
1.need skilled workers, as they’re the ones that will be able to identify issues and find solutions
what is cell production
when the production line is split into separate, self contained units, each making an identifiable part of the finished products
requirements for cell production
1.well trained staff
2.multi skilled workers
advantages of cell production
1.motivates workers
2.job rotation
3.increased productivity and efficiency
how technology changed production methods
1.automation
2.mechanization
3. computer aided designs
