Production, productivity and efficiency

Question 1

Define PRODUCTION

Answer 1

Production is the total number of units produced in a given period of time.

Question 2

What are the 4 main methods of production?

Answer 2

Job, batch, flow, cell

Question 3

Describe job production

Answer 3

One or a small number of items are produced at any one time. Normally made to customer specifications and often completed by small specialist businesses.

Question 4

Describe batch production

Answer 4

Similar items are produced together. Each batch goes through one stage of the production process before moving onto the next one. This means particular skills can be concentated in different areas of the process, achieving better use of equipment .

Question 5

Describe flow production

Answer 5

Items continuously move through the production process - as soon as one task ends another begins. The time taken for each task must therefore be the same.

Question 6

Describe cell production

Answer 6

Work is organised into teams that are given the responsibility of completing a certain part of the production process as the product moves through the assembly line.

Question 7

What are the advantages of job production?

Answer 7

• Customer requirements and changes can be handled
• Associated with higher quality
• Employees can become more motivation due to the high level of job satisfaction.
• Flexible production method.

Question 8

What are the disadvantages of job production?

Answer 8

• Individual unit costs are high
• Labour intensive so labour costs are high
• Requires close consultation with the customer
• Usually reliant on high levels of skill

Question 9

What are the advantages of batch production?

Answer 9

• Costs savings can be achieved by buying in bulk
• Still allows the customer some choice
• Specialist staff and equipment can be used
• Allows firms to handle unexpected orders.

Question 10

What are the disadvantages of batch production?

Answer 10

• Takes time to switch to each batch
• Requires higher levels of stock
• Takes may become boring and repetitive which may reduce motivation
• Size of the batch is dependent on the capacity allowed.

Question 11

What are the advantages of flow production?

Answer 11

• Costs per unit are reduced
• Suitable for the production of large amount of items.
• Capital intensive so can work constantly.
• Less need to train staff (lower costs)

Question 12

What are the disadvantages of flow production?

Answer 12

• Very long set up time and reliant on high quality machinery
• High levels of stock and raw materials
• Goods are mass produced so there is little differentiation
• Production stops if flow is stopped

Question 13

What does the best method of production depend on?

Answer 13

• Target market
• Product
• Technology
• Standards
• Resources

Question 14

Define PRODUCTIVITY

Answer 14

Productivity measures the relationship between inputs and outputs in the production process.

Question 15

Define LABOUR PRODUCTIVITY

Answer 15

Labour productivity is the output per worker –> output/ number of workers

Question 16

How can a business improve its productivity?

Answer 16

• Training
• Improved motivation
• Better/more capital equipment
• Better quality raw materials
• Improved organisation of production

Question 17

What are the difficulties faced when improving productivity?

Answer 17

• Impact on quality/customer satisfaction

- Employees may feel exploited due to the increase in workload.

Question 18

Define EFFICIENCY

Answer 18

Efficiency is the lowest cost per unit at which production can take place.

Question 19

How is average unit cost calculated?

Answer 19

Average unit cost = total cost/ number of units

Question 20

How can efficiency be improved?

Answer 20

• Provide more training
• Improve motivation
• More capital equipment
• Better capital equipment
• Better quality raw materials
• Improved organisation of production

Question 21

Define ECONOMIES OF SCALE

Answer 21

Economies of scale is when the unit cost decreases as levels of output increases.

Question 22

Define LABOUR INTENSIVE

Answer 22

Labour intensive production relies heavily on using labour resources. It requires a lot of workers.

Question 23

Define CAPITAL INTENSIVE

Answer 23

Capital intensive production relies on using a lot of capital equipment. It requires a lot of machinery and technology.

Question 24

What are the implications of labour intensive production?

Answer 24

• Labour costs are higher than capital costs

- Access to low cost labour

Question 25

What are the disadvantages of capital intensive production?

Answer 25

• Significant investment
• Potential for loss of competition due to obsolescence risk
• May generate conflict amongst existing labour force

Question 26

What are the advantages of capital intensive production?

Answer 26

• Greater opportunities for economies of scale.
• Potential for better productivity
• Better quality and speed
• Low labour costs

Question 27

What are the advantages of labour intensive production?

Answer 27

• Unit costs may still be low in low wage areas
• Labour is a flexible resource - staff can be trained
• Can help continuous improvement

Question 28

What are the disadvantages of labour intensive production?

Answer 28

• Greater risk of conflict between employee/employer
• Potentially high labour turnover
• Need for continuous investment in training.

Question 29

What are the implications of capital intensive production?

Answer 29

• Capital costs are higher than labour costs
• Costs are mainly fixed and therefore there is a higher breakeven output.
• Access to long term, low cost financing.