Methods of Production Flashcards
What are the 2 types of budgets?
Sales budgets
Production budgets
What is the purpose of sales budgets?
Provide targets for sales staff to aim for.
Be used in conjunction with bonuses or commission for meetings targets.
Motivate sales staff to reach targets.
What is the purpose of production budgets?
Plan production so that there are enough goods to meet anticipated sales.
Allow enough raw materials to be purchased so there is no understocking.
Allow for not too many raw materials to be purchased so there is no overstocking.
What are the 2 things capital-intensive production can utilise?
Automation
Mechanisation
What is automation?
Refers to production being fully automatic. This involves the use of Computer Aided Manufacture (CAM) to control fully automated assembly lines that use robotics.
What are the advantages of using automation?
CAM/robotics produce products in exactly the same way every time, improving consistency.
CAM doesn’t lose concentration so fewer mistakes are made, which limits waste.
Robots can do jobs that are dangerous for humans to do.
Robots don’t take breaks, holidays or sick leave so can work 24/7.
Fewer employees are needed as automation doesn’t require human control, reducing wage costs.
What are the disadvantages of using automation?
Huge investment is needed to automate a production line.
Breakdowns can be catastrophic, losing hours of production time and wasting vast amounts of materials.
Replacing labour with automated robotics will demotivate retained employees.
Absence of a ‘human touch’, often leads to lack of creativity and personality in the products produced.
What is mechanisation?
Refers to labour and machines working together to produce products.
What are the advantages of using mechanisation?
Using machinery improves accuracy over purely handmade products as human error is lessened.
Using machinery can speed up production.
Unlike automation, a human element exists in mechanisation, improving creativity.
What are the disadvantages of using mechanisation?
The machines and equipment can’t be used without humans, so are liable to some human error.
Production can’t be 24/7 as humans require breaks, holidays, and so on.
If machinery breaks down the business has to repair it, leaving workers idle.
What are the advantages of labour-intensive production?
Labour can be less expensive than capital-intensive production.
Humans can use initiative and creativity, something that is often lacking in automated systems.
There’s a constant supply of labour, often skilled labour, available in areas of the country with manufacturing traditions.
Employees are motivated as they are not ‘giving up’ tasks to machines.
What are the disadvantages of labour-intensive production?
The business is at high risk of human error, resulting in waste, faulty products and disgruntled customers.
Humans have to take breaks, holidays etc. which limits production time.
Humans have to be paid overtime for working over normal hours whereas machines cost the same at any time of day.
Recruitment, training and wage costs need to be considered.
What are the factors affecting production choices?
Quantity of goods required
Skills of the workforce
Cost of labour
Finance available
Technology available
How does the quantity of goods required affect production choices?
If large quantities are required, capital-intensive production will be more suitable than labour-intensive.
How does the skills of the workforce affect production choices?
If the workforce is highly skilled, their expertise would be better suited to labour-intensive production.
How does the cost of labour affect production choices?
Rising labour costs (perhaps due to a rising minimum wage) could mean that the business should move to capital-intensive production.
How does the finance available affect production choices?
Large amounts of finance are required to equip factories or hire the number of staff needed for large-scale capital-intensive production.
How does the technology available affect production choices?
If the business doesn’t have to technology required for capital-intensive production, labour-intensive is the only option.
Explain the costs and benefits of mechanisation
A cost is that production can’t happen 24/7 as humans require breaks. The effect of this is that the business will not produce as many products as it would have if it was fully capital-intensive.
A benefit is that unlike automation, a human element still exists which improves creativity. This means that products may be more appealing to customers.
