chapter 18 Flashcards
what is production of a product?
This is when a business adds value to raw material and inputs in order to produce a product or service that satisfies customers needs and wants. they combine the factors of production to produce valuable outputs.
the outputs should increase will the costs decrease
Why does production of a product need to be done efficiently and what are the benefits?
this needs to be done in an efficient way as raw material is scarce so they must not be wasted as well as this cutting back on costs leads to higher profits and the ability of the business, to lower the selling price of their products which encourages consumers to purchase their products, thus they maintain competitiveness, and there are cheaper products for the consumer to buy
where are wages low
in developing countries wages are likely to be low, which leads to businesses being labor-intensive 
where are wages high?
developed countries are likely to have high labor costs. Thus businesses are capital intensive. 
what is the operations department?
The operations department has the responsibility of taking input and turning them into outputs for consumer use
Who is a factory manager?
They maintain the quantity, and the quality of the products being produced
Who is the purchasing manager?
They provide material and equipment needed for production
Who is the research and development manager?
They design and test new production processes as well as the products
what is productivity?
Productivity is output measured against the inputs used to create it. This is how a business can measure its efficiency. Productivity equals output, divided by quantity of input
Businesses usually want to measure the productivity of an input for an example labor productivity
how can productivity be increased?
Using fewer inputs to produce the same output, or using the same inputs to reduce a greater output or inventory control to reduce waste, more automation, improve training to increase employee efficiency, and motivate employees.
What are the benefits of increasing productivity?
there can be lower business costs which lead to lower selling prices, while having a sufficient profit, which makes it cheaper for the consumers, as well as this fewer workers are needed due to a self sufficient business and higher wages can also be paid to the employees which increases motivation
why do businesses hold inventory?
This is to ensure that there is enough products to satisfy the consumer needs and demands when inventories get to a certain level, also known as the re-order point they will be re-ordered in order to go back to its maximum level.
what happens if there’s a high level of inventory?
This cost a lot of money for the business to store the inventory. Does this increases the waste of a business as they are holding goods that are not being used and the money could’ve been used elsewhere
what is buffer inventory?
Buffer inventory is the level of inventory held to deal with uncertainty in the consumer demand and delivery of supplies. This is known as the minimum level of inventory.
what is lead time?
This is the time between placing an order and receiving it
