Theme 2 section 9 (1st unit of theme 2)

Question 1

What is job production ?

Answer 1

Job production is a production method which is used to produce one off/ bespoke items

Question 2

Benefits and drawbacks of job production

Answer 2

Benefits
- high employee motivation levels as highly skilled workers are needed for job production
-add value to a product as it is hand made to a high quality-> charge a higher price which leads to greater productivity for a business

Drawbacks
- can’t benefit from economies of scale and can’t purchase in bulk as production is irregular
- higher production costs as skilled employees/tradespeople need to be paid higher wages
- hard to increase production levels when faced with a fluctuation in demand
-may need lots of specialist tools-> higher production costs for the business and therefore overall unit costs

Question 3

What is batch production ?

Answer 3

Batch production is a form of production which products are made in batches /sets of different products with each product being identical to another in a specific batch ( become a standard product)

Question 4

Benefits and drawbacks of batch production

Answer 4

Benefits
-production can easily be changed to meet fluctuations in consumer demand
-less labour intensive for the business/employees
-lower unit cost
Drawbacks
-smaller batches means that there will be higher unit costs than if using flow production
-less motivated employees as a result of repetitive work which may lead to lower production levels

Question 5

What is flow production ?

Answer 5

Flow production is a production method by which a large amount of identical products are made constantly (24h a day ) using an assembly line e.g washing up liquids and products which are produced on a mass scale using mass production methods

Question 6

Benefits and drawbacks of mass production

Answer 6

Benefits
-can make larger quantities which means that businesses can bulk buy and benefit from economies of scale
-no machine downtime means that there is higher output levels
Drawbacks
-higher start up costs than other production methods due to the machinery which needs to be purchased -> sometimes specialist so even more expensive to buy -> capital intensive process
-very inflexible -> hard to change production if need to produce another product at short notice

Question 7

What is cell production ?

Answer 7

Cell production is when an assembly line is divided into sets of tasks, each which is completed by a work group eg. Dr martins shoes

Question 8

Benefits and drawbacks of cell production

Answer 8

Benefits
-higher employee motivation levels as employees work in teams which gives them a greater sense of responsibility and they feel that they have become valued within a business
- time waiting for stock to arrive is reduced due to the use of JIT stock control
( just in time stock control means that the business will receive deliveries of materials needed for the production process just in time which also Haley’s to reduce the levels of money which a business has held up in stock storage/ stock in general )
Drawbacks
-product is removed from cell at each stage which means that productivity levels are lower than when using flow production compared to when using cell production

Question 9

What is the definition for productivity ?

Answer 9

Productivity is the rate of production from each input ( human or automated /machine input )

Productivity is measured as the output per unit of input per unit of time

Question 10

Factors which influence productivity

Answer 10

-use of machinery
-employee motivation levels
-the human workforce
- employee training
- piece work
- employees being instructed to increase productivity levels

Question 11

What is labour intensive production ?

Answer 11

When a firm uses more human resources and less machinery

Question 12

What is capital intensive production?

Answer 12

When a firm uses more machinery and less Human Resources / employees

Question 13

What is the definition of productivity ?

Answer 13

Productivity - the output ( product made) per input (person /machine) per hour
Productivity can be measured as the output per unit of input per unit of time

Question 14

What is the definition of production ?

Answer 14

Production - the total amount of output that is produced in a set time period

Question 15

Ways which businesses try to increase productivity levels - introduction of machinery benefits and drawbacks

Answer 15

Benefits of introducing new machinery -
- increases the firms productivity levels as the new machinery can work for a longer period of time than humans can - less machinery downtime
- replaces tasks done by humans which reduces the businesses costs and therefore overall unit costs - can become more competitive
Drawbacks -
-initially very capital intensive (requires a large amount of initial investment)
- as machinery gets old the level of machinery maintenance required may increase which means that there will be more production stoppages ( downtime)
- will take longer to reprogram machinery if the business changes production - this may take longer than it would for employees to learn the new skills

Question 16

Ways which businesses try to increase productivity - human workforce training benefits and drawbacks

Answer 16

• benefits-
• motivate staff to work harder as they feel more valued in a business as a result of the extra training - business has invested in the staff ( staff as an asset) means that they can add value to the products and justify higher prices and profit margains for the business
• Drawbacks
• initial drop in productivity as the workforce undertakes the training
• costly to the business to carrry out especially if they have a high staff turnover rate

Question 17

Ways businesses try to increase productivity - hiring of a key worker benefits and drawbacks

Answer 17

Benefits
- production line superior will help to motivate and monitor a workforce,increasing productivity levels
Drawbacks
- additional cost of employment may not be worth the potential productivity gains

Question 18

What does it mean if a business / firm is labour intensive ?

Answer 18

Being labour intensive means that a firm is using more workers and less machinery

Question 19

What is the definition of capacity utilisation ?

Answer 19

Capacity utilisation - the extent to which the maximum capacity for output that is being used, normally expressed as a percentage of the max output

Question 20

Formula for capacity utilisation

Answer 20

Capacity utilisation = current output % maximum output x 100

Question 21

Effects on a business of having low capacity utilisation

Answer 21

Under utilisation is when a firm has too much capacity and not enough demand. In order to reach maximum capacity the firm will try to increase demand and then if that doesn’t work they will try to reduce their capacity to be more efficient. - the fixed costs of the business may be too high to stay in business or to continue to produce that specific product
Benefits
- can accept an emergency non standard order from a customer
- have more time to upgrade and maintain machinery which means that if they begin to operate at a higher capacity then there will be less machinery downtime
- more time to train staff - higher staff motivation levels which may result in higher productivity and output levels of the business

Question 22

What does it mean if a business has high capacity utilisation ?

Answer 22

High capacity utilisation means that the total fixed costs of a business are spread out over more units of production. This means that the variable cost per unit will be lower and the business can benefit from economies of scale and lower and more competitive pricing strategies

Question 24

What is stock control and what does it include ?

Answer 24

Stock control is the flow of stock in a business. Stock control includes; management and ordering of raw materials,components, works in progress and finished goods

Question 25

What is the definition of a stock control diagram ?

Answer 25

Stock control diagram - a diagram which is used by business managers to analyse and control stock over a period of time

Question 26

What is the definition of buffer stock ?

Answer 26

Buffer stock is the minimum level of stock which is needed by a business at any one time to prevent it from running out of raw materials or finished goods

Question 27

What is the definition of re order quantity ?

Answer 27

Re order quantity is the amount of raw materials,components, finished goods or works in progress which a business regularly orders from a supplier when approaching their levels of buffer stock

Question 28

Benefits and drawbacks of stock control

Answer 28

Benefits
- helps to avoid running out of stock so that the business can consistently meet consumer demand in the event of a fluctuation of consumer demand or a sudden decrease in supply available from suppliers
- can benefit from purchasing economies of scale as will be purchasing in bulk more often

Drawbacks
- storage costs may be high
- opportunity cost of having high amounts of capital tied up in stock
- - stock could be better used elsewhere within the business
- wastage costs - if the business holds stock for a long amount of time it is more likely to generate waste by going out of fashion of becoming obsolete in the case of perishable stock such as food stuffs

Question 29

What is the definition of stock out costs ?

Answer 29

Stock out costs are the costs associated with a business not having stock when they need it

Question 30

What are the impacts on a business of stock out costs ?

Answer 30

• may loose customers to competitors if they don’t have stock in when needed
• poor brand reputation if they never have items in stock - inconvenient to a customer
• inconsistent cash inflows
• loss of sales revenue
• disruption to production

Question 31

Definition of just in time ( JIT) stock management

Answer 31

JIT stock management is when a business doesn’t keep stocks of parts in a warehouse and instead they order the parts and components of a product to arrive just in time just as customers need them.
JIT stock management is a form of lean production which aims to eliminate waste

Question 32

Benefits and drawbacks of JIT stock management

Answer 32

Benefits -
- lower storage costs as not as much storage space is needed
- parts ordered as needed means that there is minimal waste
- stock is less likely to go out of date - lower wastage costs
- better cash flow levels within the business as there is less cash which is tied up in the stock of a business

Drawbacks
- less likely to be able to meet unpredictable surges of demand and supply available
- can’t quickly replace damaged parts
- if delivery doesn’t come in time this may result in a halt to the production of the business

Question 33

Definition of waste

Answer 33

Waste is any activity within a business which the customer doesn’t value and isn’t willing to pay for ( essentially any practice with doesn’t add value to a product )