chapter 18 - production of goods & services Flashcards
definition of:
production
effective management of resources in producing goods and services
role of operative department
- use resources in a cost-effective manner
- manage inventory effectively
- produce the required output to meet customers expectations
- meet quality standard
definition of:
productivity
a measure of efficiency of the inputs used in production process over a period of time
formula= quantity of output/ quantity of input
definition of:
labour productivity
a measure of efficiency of employees in producing output
how to increase productivity?
- training
- introduce automation
- improve employee motivation
- improve quality control
definition of:
inventory-management
firms hold inventory of raw materials, goods that are not completed yet and finished goods
definition of:
lead time
time taken for supplies to arrive
explain max inventory level
when inventory gets to a certain point (reorder level), firms reorder to bring inventory level to maximum level
definition of:
buffer inventory level
the level of inventory a firm should hold at the very minimum to meet any unexpected demands from customers
definition of:
lean production
the various techniques a firm can adapt to reduce wastage and increase efficiency
types of wastages
- motion
- inventory
- over-production
- transportation
- over processing
- waiting
- defects
benefits of lean production
- less storage of raw materials, components and finished goods (save cost)
- quicker production of goods and services
- no need to repair faulty goods
definition of:
kaizen
a Japanese term for continuous improvement through elimination of waste; it aims to increase efficiency and reduce wastage by getting workers to work together and suggest solutions
benefits of kaizen
- increased productivity
- less risk of accident - better motion - improved floor layout
- reduce amount of space needed for production
definition of:
just-in-time
this technique eliminates to hold inventory by ensuring that the supplies arrived just in time when needed for production
benefits of just in time
- reduce storage cost
- no warehouse needed
- finished goods immediately sold off; cash flows in quickly
definition of:
cell production
production line is divided into separate self-contained units each making a part of finished good
benefits of cell production
- improve morale
- able to concentrate on one part alone
definition of:
job production
products are made specifically to order, customised for each customer
advantages of job production
- quality meets customers exact requirement and expectation
- workers have more varied jobs with each order diff
- flexible method of production
disadvantages of job production
- skilled labour expensive to hire
- high cost - diff materials for diff orders
- expensive to fix any faults
definition of:
batch production
a large quantity of products are made then a quantity of another item will be produced
advantages of batch production
- flexible way or working - production can be easily switched
- increase work variety
- if one machinery breaks down, other products can still be made
- more variety, increase consumers choice
disadvantages of batch production
- machinery needs to reset, production process delayed
- expensive to move finished goods to the next production stage
- lots of raw material needed for diff product batches; expensive
definition of:
flow production
large quantities of products are produced in a continuous process in the production line
advantages of flow production
- economies of scale
- capital intensive - reduce labour cost - increase efficiency
- high output of standardised products
- quick and efficient
disadvantages of flow production
- high cost to set up and maintain capital
- boring system for workers - low job satisfaction
- if one machinery breaks down, production process disrupted
factors affecting which production method to use
- nature of products
- nature of demand
- size of market
- size of business
advantages of technology with production
- greater productivity
- standardised output produced
- better quality
- greater job satisfaction - boring routine jobs done by machine
disadvantages of technology with production
- high capital cost for set up and maintenance
- unemployment rise
- expensive and time consuming as machine becomes outdated
- takes time for employees to adjust to new tech
