Production, productivity and efficiency Flashcards
Define PRODUCTION
Production is the total number of units produced in a given period of time.
What are the 4 main methods of production?
Job, batch, flow, cell
Describe job production
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.
Describe batch production
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 .
Describe flow production
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.
Describe cell production
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.
What are the advantages of job production?
- 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.
What are the disadvantages of job production?
- 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
What are the advantages of batch production?
- 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.
What are the disadvantages of batch production?
- 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.
What are the advantages of flow production?
- 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)
What are the disadvantages of flow production?
- 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
What does the best method of production depend on?
- Target market
- Product
- Technology
- Standards
- Resources
Define PRODUCTIVITY
Productivity measures the relationship between inputs and outputs in the production process.
Define LABOUR PRODUCTIVITY
Labour productivity is the output per worker –> output/ number of workers
How can a business improve its productivity?
- Training
- Improved motivation
- Better/more capital equipment
- Better quality raw materials
- Improved organisation of production
What are the difficulties faced when improving productivity?
- Impact on quality/customer satisfaction
- Employees may feel exploited due to the increase in workload.
Define EFFICIENCY
Efficiency is the lowest cost per unit at which production can take place.
How is average unit cost calculated?
Average unit cost = total cost/ number of units
How can efficiency be improved?
- Provide more training
- Improve motivation
- More capital equipment
- Better capital equipment
- Better quality raw materials
- Improved organisation of production
Define ECONOMIES OF SCALE
Economies of scale is when the unit cost decreases as levels of output increases.
Define LABOUR INTENSIVE
Labour intensive production relies heavily on using labour resources. It requires a lot of workers.
Define CAPITAL INTENSIVE
Capital intensive production relies on using a lot of capital equipment. It requires a lot of machinery and technology.
What are the implications of labour intensive production?
- Labour costs are higher than capital costs
- Access to low cost labour
What are the disadvantages of capital intensive production?
- Significant investment
- Potential for loss of competition due to obsolescence risk
- May generate conflict amongst existing labour force
What are the advantages of capital intensive production?
- Greater opportunities for economies of scale.
- Potential for better productivity
- Better quality and speed
- Low labour costs
What are the advantages of labour intensive production?
- Unit costs may still be low in low wage areas
- Labour is a flexible resource - staff can be trained
- Can help continuous improvement
What are the disadvantages of labour intensive production?
- Greater risk of conflict between employee/employer
- Potentially high labour turnover
- Need for continuous investment in training.
What are the implications of capital intensive production?
- 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.
