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Business > 2.4 > Flashcards

2.4 Flashcards

1
Q

What does efficiency mean?

A

It means using resources in such a way that production costs are kept as low as possible. It is about getting the maximum output from the minimum input.

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2
Q

Methods of production?

A

Job
Batch
Flow
Cell

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3
Q

What is job production?

A

It means producing one single item at a time. It works well for products with individual specifications.

Works for large or costly products.

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4
Q

What is batch production?

A

It is about a medium sized production run, usually partly mechanised but capable of producing cheaply.

Works for mass production, flexibility, short production.

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5
Q

What is flow production?

A

Each employee does one thing as the product goes part and the next person on the line adds the next component.

Works for mass production

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6
Q

What is cell production?

A

Means each cell will be team working. All members of the team will be multi-skilled and able to do a range of jobs. Individual items do not need to be identical.

Works for a basic product with many small variations added

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7
Q

What is productivity?

A

Measures how efficiently resources are actually being used by looking at output per unit over a given time period.

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8
Q

Ways to increase productivity?

A

Amount of capital (machinery) used
Technology (improvements)
Human capital (skills and abilities of workforce)
Organising resources more efficiently

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9
Q

Factors influencing efficiency?

A 
New technology is introduced
New processes use more capital equipment
Productivity rises
Costs fall
Prices fall
Sales increase
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10
Q

What is process innovation?

A

It means using new technologies to improve production methods, so that costs are reduced. It can apply to services as well as goods.

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11
Q

What is human capital?

A

The knowledge and skills acquired by individuals - the more education and training they get, the more human capital they have.

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12
Q

What does capital investment do?

A

It raises labour productivity and often cuts costs. It becomes possible to increase the supply of consumer goods while using the same amount of labour (or less).

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13
Q

What is outsourcing?

A

It means that the business buys some inputs from other businesses, rather than using its own employees to do the work. It can also mean building a factory or facility in another country with low labour costs (offshoring).

Outsourcing may help to increase efficiency.

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14
Q

Difference between capital and labour intensive production?

A

Capital intensive production uses large amounts of capital and relatively little labour.

Labour intensive production uses large amounts of labour and relatively little capital.

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15
Q

How to decide between capital or labour intensive?

A

Nature of the product

Relative cost of labour vs capital

Size of the business

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16
Q

What is capacity utilisation?

A

It measures what proportion or percentage of the theoretical maximum possible output is actually produced

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17
Q

How to calculate capacity utilisation?

A

Current output / maximum possible output x100

18
Q

What is under-utilisation of capacity?

Implications?

A

It means that some resources are not being used and production is not as high as it could be

It could cause inefficiency
Increase in average total coasts

19
Q

What is over-utilisation of capacity?

Implications?

A

It means that the business is trying to produce more than its capital equipment was designed for

It leads to no ‘down time’ for machinery
Staff absence due to high working causes slower production
Quality may suffer

20
Q

Which is best? Over or under?

A

Under

21
Q

How to increase capacity utilisation?

A

Improving marketing to increase sales
Diversifying into new markets
Adding a new product line to the range
Taking on production for other businesses that have over-utilised capacity.

22
Q

Ways to increase production in the short term even with over-utilised capacity?

A

Staff could work more shifts
Production could be sub-contracted out
Temporary or part time staff can be taken on

23
Q

Ways to increase production in the long term even with over-utilised capacity?

A

Invest in more capacity, extend premises, buy more machinery
Sub-contact or outsource some production
Recruit more full time staff
Improve productivity e.g. re-organisation

24
Q

What is stock control?

A

The process of making sure that the optimum level of stock is held so that demand can be met while keeping the costs of holding that stock to a minimum

25
Q

What is buffer stock?

A

Levels of stock kept ‘just in case’. There may be a problem with delivery and the new stock may not arrive. Buffer stocks mean that the business can continue production.

26
Q

Implications of having too much stock?

A

Increased costs in storing and handling stock.

Cash can be used elsewhere.

27
Q

Implications of too little stock?

A

May run out and halt production.

May lose customers as a result.

28
Q

What is JIT stock management?

A

It’s a stock control system that does away with the need to hold large quantities of stocks or raw materials. Stocks arrive as and when they are needed.

29
Q

JIT advantages?

A

More storage space available for production
Cash flow improves with less money tied up in stock
Cash is freed up for other uses
Less waste as less chance of damage in storage
Business is flexinle and can respond quickly to changes in demand

30
Q

JIT disadvantages?

A

Needs very careful monitoring
Needs a good working relationship with suppliers and real trust
Business is less likely to benefit from reduced unit costs for bulk purchases
If the system fails there may be delays in production

31
Q

What is waste minimisation?

A

It seeks to increase productivity by examining every stage of production or operational systems to see if they can be improved, so making efficiency gains.

32
Q

Waste minimisation areas?

A 
Under-used resources
Movement of stocks
Movement of people
Energy use
Production flow
Stock levels
Defects and faulty products
Waiting times
33
Q

What is lean production?

A

A term given to any system of production that tries to minimise waste during the production process. This helps to cut costs.

34
Q

Features of lean production?

A 
Total quality management 
Kaizen
Flexibility
Lead times
Lean suppliers
Waste minimisation
Just in time
35
Q

What is kaizen?

A

A system of continuous improvement at every stage of production, no matter how small the improvements might be

36
Q

Advantages of lean production?

A

Adds efficiency
Removes areas of activity that don’t add value to end product
Quality increases
Staff feel more involved and motivated
Average costs should decreased as waste is minimised
Should lead to a competitive advantages through lower prices/improved quality/reputation.

37
Q

What is quality control?

A

The method of checking that products are of a good enough standard.

38
Q

What is quality assurance?

A

Takes into account customers needs and involves implodes in looking at every aspect of the business in an attempt to improve the quality of the product.

39
Q

What are quality circles?

A

Small groups of employees that meet regularly and look at how quality can be improved. Any recommendations are passed to management and may be acted upon.

40
Q

What is total quality management? (TQM)

A

All employees are involved in quality control and take responsibility for the quality of their teams work.

Reduces costly waste and reinforces employee motivation

41
Q

Drawbacks of TQM?

A

Costly to setup and takes time
It may meet initial resistance from bother workers and management
It will cause disruption until it is properly in place

Business (15 decks)

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