Resource Management

Question 1

Define capacity

Answer 1

Measure of how much potential output a business can achieve in a given period

Question 3

Define stocks

Answer 3

Stocks represent the raw materials, work in progress and finished goods held by a firm to enable production and meet customer demand

Question 4

Define work in progress

Answer 4

Semi or part-finished production

Question 5

Name and explain drawbacks of high capacity utilisation

Answer 5

Negative effect on quality (and customer service)

• production is rushed
• less time for quality control

Employees suffer

• Added workloads& stress
• Demotivating if sustained for too long

Loss of sales

• less able to meet sudden or unexpected increases in demand
• Production equipment may require repair

Less time for maintenance
-higher chance of breakdowns

Question 6

How much stock should a business hold

Answer 6

Need to satisfy demand:

• Failure to have goods available for sale is very costly
• Demand may be seasonal or unpredictable

Need to manage working capital:

• Holding stocks ties up cash in working capital
• There is an opportunity cost associated with stock holding

Risk of stock losing value:
-Longer stocks are held, the greater the risk that they cannot be used or sold or that they will drop in value (esp if perishable)

Question 7

How can you improve productivity in a business?

Answer 7

training

improved motivation

more/ better capital equipment

better quality raw materials

improved organisation of production (right stock level& capacity)

Question 8

What types of production are there? Explain them briefly

Answer 8

job production: one-off or small number of items produced

batch production: similar items produced together

flow production: products move continuously through production process

process production: involves a series of processes which raw materials go through

cell production: work is organised into teams