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Business > Production Function > Flashcards

Production Function Flashcards

1
Q

What are the factors of production

A

Land, entrepreneur, labour and capital

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2
Q

What income does land give us

A

Rent

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3
Q

What income does labour give us

A

Wages

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4
Q

What income does capital give us

A

Interest

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5
Q

What income does enterprise give us

A

Profit

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6
Q

What are the the difference systems of production

A

Jobbing, batch production and mass production

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7
Q

What are the characteristics of mass production

A
  • Single purpose machines
  • standardised products
  • little variety
  • assembly lines
  • balanced machine capacity
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8
Q

What are the advantages of mass production

A
  • Lower cost per unit
  • work is done faster and cheaper
  • specialisation Is cost saving (one specific thing to make)
  • easy quality control
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9
Q

What are the disadvantages of mass production

A
  • inflexible
  • hard to deal with changes in demand
  • expensive machines
  • expensive to make changes to machine
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10
Q

What are the characteristics of jobbing

A
  • interrupted system
  • one job must finish before the next one is started
  • uses general purpose machines
  • jobs are seldom repeated
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11
Q

What are the characteristics of batch production

A
  • in between jobbing and mass production
  • products are made in batches
  • machines have to be stopped and reprogrammed for new batches
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12
Q

What are examples of jobbing

A

Hospital, seamstress

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13
Q

What is batch production exams

A

Clothes dryer, fast food, trucks

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14
Q

What is production planning aimed at

A

Implementing the organisations policy on production. It is the what and how of producing the product itself

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15
Q

What are economies of scale

A

Buying in bulk, meaning discounts can be offers if large quantities are ordered because the fixed costs are split, it is a phenomenon of mass production

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16
Q

What are diseconomies of scale

A

When the benefits of buying in bulk are no longer in place because of lack of raw materials, communication, inefficient decision making or shortage of skilled labour. These cancel out the discounts because of a change in turn around time and life span of the product.

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17
Q

What are the different aspects relating to production planning

A

Optimum manufacturing plant scale, factory layout , equipment and machines in the plant, machine utilisation

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18
Q

What does optimum manufacturing plant scale refer to

A
  • Size of factory
  • law of increasing returns or diminishing costs
  • spacing planing
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19
Q

What does factory layout refer to

A
  • logical flow of production
  • workstations close to materials
  • use of all space
  • future alterations
  • safety standards compliance
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20
Q

What does equipment and machines in the plant refer to

A

significant capital investment requires careful purchases which depends on
- production system and rate of production
- price and maintenance cost
- availability of spare part
- lifespan of machine
- resale value
- training and safety

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21
Q

What does machine utilisation refer to

A

-number of operational hours per day
- used to fill capacity
- 24 hour production (shifts)
- avoiding bottlenecks
- planned maintenance (remedial, preventative and conditional)

22
Q

What are the advantages of automation

A
  • lower labour costs
  • faster production time
  • better quality (less human error)
  • workers can be retrained to learn new skills
  • less issues with labour law
23
Q

What are the disadvantages of automation

A
  • workers may lose their jobs
  • worker dissatisfaction (division of labour is monotonous)
  • high capital investment
  • cost to retrain
  • service delivery may be intermittent (eg electricity)
  • productions may need further refinement after machine processing
24
Q

Why is factory safety important

A

Any condition that jeopardises health decreases productivity

25
Q

What are the factory hygiene requirements

A
  • ventilation (windows or air vents)
  • temperature and humidity control
  • good lighting reduced accidents
  • ablution facilities and change rooms
  • canteens
  • first aid basic medical assistance
26
Q

What are the different factory safety requirements

A
  • structural
  • fire protection
  • protection of workers against machinery
  • factory legislation
  • general safety and conservation of the environment
27
Q

What is structural safety

A

Involves the construction of the building

28
Q

What are the fire protection requirements

A

Every room must have two exits, fire escapes, firefighting equipment, warning labels for flammable materials and fire walls

29
Q

What are the safety requirements for protection of workers against machinery

A

Provide correct safety clothes and non slip floors

30
Q

What is factory legislation

A

All factories must be registered with the department of manpower to be inspected regularly. Compliance is required regarding installation, operation and use of machines, safety and health precautions, clothing and safety equipment, details of first aid equipment and fire prevention methods

31
Q

What does general safety and environmental conservation entail

A

Control pollution: dispose of waste safely without harming environment

Business are going green to show the consumer to show that they are responsible

It may be part of the business corporate social responsibility

32
Q

What is the occupational health and safety act

A

It is the duty of the employers to
- have acceptable levels of cleanliness
- where possible provide safety equipment
- provide health protection equipment
- appoint a health and safety officer per 20 employees and a committee if there are more than 20 employees
- have strategies to deal with problems that may arise
- employees are required to take reasonable care to ensure their own safety

33
Q

What is quality control

A

Operational techniques and activities that are used to fulfil requirements for quality in a product or process

34
Q

What are the advantages of quality control

A
  • Increased sale
  • reduced wastages
  • improved reputation
  • reduced inspection cost
  • good customer relations
  • uniformity in quality
35
Q

What are the methods of quality control

A

Sampling and inspection

36
Q

What is sampling

A

Testing a few products from the batch

37
Q

What is the disadvantages of sampling

A

There is a risk of bad batches being accepted. More samples can reduce this risk but will increase cost of quality control

38
Q

What is inspection

A

When each product is tested against set standard (this is used on expensive products such as a car)

39
Q

What is the disadvantage of inspection

A

It’s time consuming and costly

40
Q

What is the importance of effective costing

A

It is important that the cost accountant provides management with accurate cost calculations in order for management to determine a competitive selling price. The cost accountant will work closely together with the purchasing and production departments to try and minimise costs.

41
Q

What is the cost of the product important to the manufacturer

A
  • the lower the cost the higher the profit
  • selling prices can only be determined once the cost price has been calculated
  • management needs accurate cost calculations in order to make decisions and to forecast income
  • it is important to determine the break even point
42
Q

What are examples of direct costs

A

Direct raw material, direct labour, primary cost

43
Q

What is direct raw material

A

Materials used directly in the production of the product (eg wood and nails to make a desk)

44
Q

What is direct labour

A

The salaries and wages of the workers producing the product on the factory floor

45
Q

What is primary costs

A

The sum of direct raw material and direct labour is known as the primary cost

46
Q

What are variable overheads

A

Varies in relation to units produced. As production increases variable costs will increase. (Eg water and electricity)

47
Q

What are fixed overheads

A

Remains the same irrespective of the output (eg rent, insurance, depreciation and indirect labour)

48
Q

What is the total cost

A

The sum of primary cost as well as all fixed and the variable overheads

49
Q

What is the cost per unit

A

Total cost divided by the number of units produced

50
Q

What is the break even point

A

When the business makes neither a profit nor a loss, when volume of production increases, a profit will be made. This means income generated is equal to the total production cost

Business (16 decks)

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