Chapter 18: Production of goods and services Flashcards
What is production?
It is the provision of a product or service to satisfy consumer wants and needs. The process of production adds value to the raw materials and bought in components
In production what does adding value mean?
Businesses combine the inputs of a business (factors of production) to produce a more valuable product or service.
What is productions role in maintaining competitiveness?
The resources should be combined efficiently it makes the best use of resources, to keep costs low and and wastage low to increase profits.
What is a labor-intensive business? When is it’s usage most appropriate?
Is a business that uses mostly manual labor in production. Its best used in developing countries where the need for employment is high and so wages swill be low.
What is a capital intensive business? When is it’s usage most appropriate?
Is when the production process mostly uses machinery and robots instead of workers. This is seen in mainly developed countries where wages are high because many are skilled.
What is the role of the operations department?
To take in inputs and convert them into outputs that satisfy the need and wants of the customer. They make sure that raw materials are provided and made into finished goods or services.
Who is a Factory manager?
Is responsible for the quantity and quality of products coming out of the production line. Includes maintenance and repairs.
Who is the Purchasing manager?
Responsible for providing materials, components and equipment necessary for production?
Who is the research and and development manager
Responsible for design and testing of new production processes and products.
Define the term productivity.
Output measured against inputs used to create it; labour
What does level of production mean?
The total output of a business in a given time period.
What is labor productivity?
Is the output produced by the labor force over a given period of timber against the number of workers employed.
What are the two main ways of raising productivity?
- Using fewer outputs to produce the same output
2. Using the same inputs to produce a higher level of output.
Why do businesses desire increased productivity?
Efficient employees produce more output, for the same cost. This means the cost price of producing each product decreases and allows for higher profits.
List out ways to improve productivity
- Waste reduction
- Automation.
- Employee training.
- Employee motivation.
- Technology.
What are the benefits of increasing efficiency/productivity?
- Reduced inputs needed for the same output level.
- Lower costs per unit (average cost).
- Fewer workers maybe needed, possibly leading to lower wage costs.
- Higher wages for worker: more motivation.
Define the term Inventory.
Materials, work in progress or completed goods held by a business which are or will be ready for sale.
Define the term Buffer inventory level.
Inventory held to deal with unexpected changes, e.g. in consumer demand which are or will be ready for sale.
In inventory management, what do we call the reorder point?
Is the point where a re-order will be placed with the supplier due to the decreasing of inventories either from sale or damage. It usually placed before a critical level as suppliers may take time to deliver.
Why should businesses not have too much inventory?
It would increase costs. The business will have to pay for warehousing. It also means that the money spent could have been used somewhere else; opportunity cost.
Define the term lean production.
Cutting out on waste and inefficiency in the production process.
