Production, productivity & Efficiency (2.4.1)

Question 1

What is production?

Answer 1

The transformation of resources (e.g. raw materials) into finished goods or services

Question 2

What is the difference between goods and services?

Answer 2

Goods are physical products, such as bicycles and T-shirts whereas Services are non-physical items such as hairdressing, tourism and manicures

Question 3

What are the four types of Production?

Answer 3

Job Production
Batch Production
Flow Production
Cell Production

Question 4

What is Job Production?

Answer 4

-One-off bespoke Products
-High quality products made by experienced staff

Question 5

What are the advantages of Job Production?

Answer 5

-Premium Price can be charged
-Easy to differentiate from competition

Question 6

What are the disadvantages of Job Production?

Answer 6

-Staff require higher wages and process is slow
-Unit costs tend to be higher

Question 7

What is Batch Production?

Answer 7

-Batches of similar products
-More flexible production than flow

Question 8

What are the advantages of Batch Production?

Answer 8

-Standardized process make it cheaper than job
-Use of Technology make it cheaper than job

Question 9

What are the disadvantages of Batch Production?

Answer 9

-Batch less varied than job so staff morale may be lower
-Downtime between batches make it less efficient than flow

Question 10

What is Flow Production?

Answer 10

-Large-scale,24/7 production of standardized product
-Specialist machinery designed for production line

Question 11

What are the advantages of Flow Production?

Answer 11

-Lots of Technology/low staff leads to low Unit Cost
-Consistent, standard quality

Question 12

What are the disadvantages of Flow Production?

Answer 12

-Production Process inflexible to change
-Very high initial set-up cost

Question 13

What is Cell Production?

Answer 13

-Production line split into self-contained teams
-Team carries out a process and checks the quality

Question 14

What are the advantages of Cell Production?

Answer 14

-Teamwork improves motivation and quality
-Multiskilling within teams takes place

Question 15

What are the disadvantages of Cell Production?

Answer 15

-Not as automated as batch or flow
-Cell workload has to be managed closely

Question 16

What does Standardization mean?

Answer 16

The more standardized production is, the more you can bulk buy and you can cut costs

Question 17

What does Automation mean?

Answer 17

The amount of technology you use in your production process

Question 18

What does Downtime mean?

Answer 18

The amount of time workers or technology are NOT producing goods or services

Question 19

What are Economies of Scale?

Answer 19

The more you buy, the cheaper you get each unit so the lower your Unit Costs

Question 20

What are Business Operations?

Answer 20

The method a business will use to produce and deliver a product or a service to the customer

Question 21

What is Productivity?

Answer 21

The amount of units produced by a given number of employees. Output per person or machine per hour

Question 22

What does labour productivity mean?

Answer 22

It’s a measure of the output per worker during a specific period of time

Question 23

What is the equation for Labour Productivity?

Answer 23

Total Units of Output/ Number of Employees

Question 24

What does Capital Productivity mean?

Answer 24

It’s a measure of the output of capital employed (machinery) during a specific period of time

Question 25

What is the equation for Capital Productivity?

Answer 25

Total Units of Output/ Number of Machines

Question 26

What are the ways in which you can improve productivity?

Answer 26

-Specialization and the Division of Labour -Motivate staff -Education and Training -Working Practices -Labour Flexibility -Technology

Question 27

What does Efficiency mean?

Answer 27

Maximizing your output from your inputs to minimize cost per unit. Being as cost-effective as possible

Question 28

What is efficiency often measured in terms of?

Answer 28

Average cost per unit

Question 29

How is Average Cost per unit worked out?

Answer 29

Total costs/Number of Units

Question 30

When is maximum efficiency achieved?

Answer 30

When the cost per unit is at its lowest

Question 31

How can you improve efficiency?

Answer 31

-Lean Production -Standardization -Outsourcing/Offshoring -Downsizing/Delayering -Technology -Just-In-Time Production

Question 32

What is Lean Production?

Answer 32

It focuses on eliminating waste, improving efficiency, and maintaining quality.

Question 33

What is Kaizen?

Answer 33

Kaizen is a Japanese term meaning change for the better or continuous improvement. It is a Japanese business philosophy that concerns the processes that continuously improve operations and involve all employees. Kaizen sees improvement in productivity as a gradual and methodical process.

Question 34

What are the Benefits of using Kaizen?

Answer 34

-Increased Productivity -Reduced Waste -Better management of resources -Improved quality -Better safety -Lower costs -Higher Customer Satisfaction -Improved cooperation and communication -Higher employee satisfaction and morale

Question 35

What are the Drawbacks of using Kaizen?

Answer 35

-Difficult to implement in existing businesses -Resistance to change -Time and effort required to see results -Costly -Management involvement is a must -Slow process of improving workers skills and so can demand higher wages

Question 36

What is Capital Intensive and Labor Intensive Production?

Answer 36

-Labor Intensive Production predominately uses physical labor in the production of goods/services -Capital-Intensive Production predominately uses machinery and technology in the production of goods and services

Question 37

What are the advantages and disadvantages of Labor Intensive Production?

Answer 37

Advantages: -Low-cost production where labor costs are low -Provides opportunities for workers to be creative -Workers are flexible Disadvantages: -Workers may be unreliable and need regular breaks -Incentives may be needed to motivate staff -Training costs can be significant

Question 38

What are the advantages and disadvantages of Capital Intensive Production?

Answer 38

Advantages: -Low-cost production where output is high -Machines are usually consistent and precise -Machines can run without breaks Disadvantages: -Significant set-up and maintenance costs -Breakdowns can severely delay production -May not provide flexibility in production