Unit 4

Question 1

What are Types of Production?

Answer 1

Batch - where a set of one product is made and then a set of another product is made and another and another using the same machine. An example is bread in a kitcten

Flow Production - where large quantities of a product are produced in a non stopprocess (the same product)

Job Production - where a single product is made at a time. Example could be a very expensive item like a dress for a famous preson

Question 2

What is Production?

Answer 2

Production - the process of turning inputs of resources into finished products which are more valuable

Question 3

How to calculate Labour Productivity?

Answer 3

`total Output / Number of Produvtion Employees

Question 4

What is Productivity?

Answer 4

measure of the efficiency of inputs used in the production process, especialy labour or capital

Question 5

How to improve Labour Productivity?

Answer 5

Increasing output with the same number of employees

Keeping output at the same level but with fewer empoyees

Question 6

What is Lean Production?

Answer 6

The production of goods and services with the mimimum waste of resources

Question 7

What is Just In Time Inventory Control?

Answer 7

A form of inventory management that requires working closely with suppliers so that raw materials arrive as production is scheduled to begin, but no sooner. The goal is to have the minimum amount of inventory on hand to meet demand.

Question 8

What is Kaizen?

Answer 8

A Japanease made form of inventory managment which means continuous improvment.
This oppertunity gives employees the oppertunity to.make siuggestiona about how to improve quality or productivity.
Emlpoyees are doing the day to day tasks so they may know better than managers

Question 9

Why does a business not want to hold inventories?

Answer 9

Becuase this adds. to business costs such as:
Warehousing costs - business will need to rent or purchase warehouse to store inventories
Shrinkage Costs - damaged, lost or stolen inventories will need to be replaced

Question 10

What are Benifits and Negatives of job production?

Answer 10

Benifits: Uniuque, high quality products made
Employees more motivated and take pride in their work

Negatives: Uses skiled labour rather than machines so prices are usualy higher
Production can take a long time and can be expensive if special materials or tools requiredd

Question 11

What are Benifits and Negatives of Batch Production?

Answer 11

Benifits: Since larger costs aremade, unit costs are lower
Materials can be bought in bulk, cheaper

Negatives: Employees are less mtoivated because the work becomes repetitive

Question 12

What are the Benifits and Negatives of Flow Production?

Answer 12

Benifits: Large Number of Goods are Produced

More capital intensive used (high quality of capital equipment) which lowers labour cost

Negatives: If one part of the production line breaks down, the whole production line will have to stop until it’s fixed.

Employees are less motivated to work since it’s repetitive

Requires very large capital investment

Question 13

How to calculate the Productivity?

Answer 13

Quantity produced / number of workers x time taken

Question 14

What are advantages of Tech to Business?

Answer 14

Benifits: Improves quality and reduces waste
‘Reduces time taken to design new products

Negatives: Can be very expensive
When tech is rapidly changing, it will need to be changed often to keep up with the competitors

Question 15

What are fixed costs?

Answer 15

costs that do not change with output
A fixed cost will be the same when the output is zero or when it’s at it’s maximum output

Question 16

What are Variable Costs?

Answer 16

costs that change in direct proportion to output
If output increases by 50%, veriable costs increase by 50%

Question 17

What are Total Costs?

Answer 17

All the variable and fixed costs of producing the total output

Question 18

How to calculate total costs?

Answer 18

FIxed cost + total variable costs

Question 19

What are Average Costs?

Answer 19

the cost of producing a single unit of output

Question 20

What are Economies of Scale?

Answer 20

the reduction in average costs are a resualt of increasing the sale of operation

Economies of scale are the benefits that businesses gain from expanding

Economies of scale mean large businesses are often able to produce products at a lower average cost per item that small businesses

Question 21

How do Economies of Scale affect Businesses in DIfferent Economies?

Answer 21

Financial Economies - Banks often prefer to lend large businesses loans because they know they will give the money back and consider them less of a risk than small businesses. As a result, large businesses find it easier to borrow money amd do at a lower interest rate (they are borrowing at a lower cost)

Purchasing Economies - larger businesses would usually buy better and greater quantities of materials than a smaller business. They’re benefiting because the supplioier normally offers discounts when someone buys in bulk, bigger businesses then are reducing costs on materials. Whereas, small businesses don’t buy in bulk and as much so therefore they will not get these discounts.

Question 22

What are Diseconomies of Scale?

Answer 22

Factors that cause average costs to rise as the scale of operations increases

WHen a business frows so large that it loses the benifits of economies of scale

Disesconomies of sclae comes from the problems faced when a business grows too large such as Poor Comunication and Weak Coordinationn

Question 23

Breakeven?

Answer 23

The level of output where revenue equals total costs, the business is making neither profit or loss

The revenue a business earns from selling its output exactly equals the total costs of producing the output

Question 24

What is Revenue?

Answer 24

The total amount of Income generated by the sale of goods and services
This is calculated from sales x price

Question 25

What is Output Level?

Answer 25

Output Level - how many they are producing, selling

Question 26

What does Breakeven do?

Answer 26

Breakeven gives them an idea / timeline of when they are going to make profit

Question 27

What does the Margin of Safety show?

Answer 27

Shows the difference between the current output and the break even output
The higher the margin of safety, the lower risk of losses being made

Question 28

How to calculate Margin of Safety?

Answer 28

Actual Sales - Breakeven Output

Question 29

What is Quality?

Answer 29

ensuring the service meets the needs and requirements of the customer

Question 30

What is Quality Standards?

Answer 30

The minimum standard of production or service acceptable to consumers

Question 31

Why is Quality important to a Business?

Answer 31

Develop a Strong Brand Image: Building a strong brand image based on quality makes it easier for a business to introduce new products to the market. Cusomters will know the business has a reputation of good quality and will want to buy a new product

Lengthen Proct Life Cycles - products tht are good quality will have a longer life cycle than poor quality products.

Charge a premium Price

Question 32

What are the 3 Approaches to Quality?

Answer 32

Quality Control - when inspectors check quality of finished products and throw out the ones which are not up to the appropriate standard

Quality Assurance - a system of agreed standards for every stage of production. During production, workers triea tostop faults happening in the first place

Total Quality Managment - All employees pursue quality by evaluating their working methods and making improvements to them

Question 33

Why do Businesses operate to other countries?

Answer 33

To locate production closer to Market: reduces delivery time for cusotmers and costs of transport

Labour costs in countires such as India and China are much lower

Companies may have reached their maximum sales in their home market, they need to appeal and find more cusotmers