Theme 2 Flashcards
Advantages of job production
Each piece is made to the customers exact requirements
High job satisfaction for workers
Goods are high quality
Flexible designs and can be changed
Disadvantages of job production
Products are expensive
Production is time consuming
The advantages of economies of scale are lost
Staff wages high as they are skilled
Batch production?
Where groups of items are made together in a batch. Most items go through this process e.g. Clothes manufactures
All items in the batch are the same as production is speeded up. Reduces labour costs, making item less expensive for customers
Advantages of batch production
Labour costs reduced so final price is lower
Machinery can be used
Production is faster
Takes advantage of economies of scale
Disadvantages of Batch production
Work is repetitive, staff may become demotivated, slowing production
Large storage space and large stock of raw materials needed.
Machinery may be expensive
Flow production
Where identical, standardised items are produced on an assembly line
A capital intensive process.
Mass markets use it
Employees only required to perform repetitive tasks so they’re usually semi skilled
Advantages of flow production
Final product is cheap
Large quantities can be manufactured
Low labour costs as machinery can be used
Standardised quality
Disadvantages of flow production
Repetitive, low motivation
Large investment in buildings and machinery
Increased risk of accidents
Cell production
Cell production has the flow production line split into a number of self- contained units
Each term or cell is responsible for a significant part of the finished article
Highly skilled team members in a number of roles, enhancing job rotation
Advantages of cell production
Improved job satisfaction and motivation
Multi skilled workers enhances job rotation
Improved quality as a group of workers take responsibility
Factory spaced used efficiently
Disadvantages of cell production
Output may not be high
Different ‘cells’ may work at different speeds
Heavy investment in machinery and equipment may be needed
Economies of scale?
Arise when unit costs fall as output increases
Diseconomies of scale
Unit costs start to rise as output decreases
Capacity utilisation?
The proportion of a business’s capacity that is actually being used over a specific period
Capacity
The capacity of a business is a measure of how much output it can achieve in a given period.
Changes in capacity
Maintenance of equipment can reduce capacity. Working more shifts, capacity can be increased
Seasonal change
Chocolate factories need capacity to make Easter eggs in November/December before shipping them our for March
Capacity utilisation formula
Actual level of output/ maximum possible output X 100
Job production
Where items are made individually and each item is finished before the next one is started. Example would be designer dresses
Usually unique items of a small scale
Capacity utilisation benefits
Useful measure of productive efficiency since it measures whether there are idle resources in the business
Average production costs tend to fall as output rises- so higher utilisation can reduce unit costs, making a business more competitive
Businesses aim to produce as close to 100% capacity as possible in order to reduce unit costs
When is a high level of capacity utilisation required
If a business had a high break- even output due to significant fixed costs of production
Why might businesses operate below 100%?
Lower than expected market design ( e.g. Changes in consumer tastes) Loss of market share( competitors) Seasonal variations Recent increase in capacity Maintenance programmes
Dangers of operating at low capacity utilisation
High unit costs- impacts competition
Less likely to reach break-even output
Capital tied up in under-utiIised assets
