2.4 - Resource Management

Question 1

What is batch production?

Answer 1

A method that involves producing products in groups

Question 2

What is cell production?

Answer 2

Producing a family of products in a small self-contained unit (a cell) within a factory

Question 3

What is flow production?

Answer 3

Large-scale production of a product where each operation is performed continuously after the previous

Question 4

What is job production?

Answer 4

The manufacture of one, bespoke product at a time

Question 5

What is meant by capital intensive?

Answer 5

when products are mainly produced by machinery

Question 6

What is meant by capital productivity?

Answer 6

The amount of output each unit of capital produces

Question 7

What is efficiency?

Answer 7

Producing a level of output where average cost is minimised

Question 8

What is meant by kaizen?

Answer 8

A Japanese term that means continuous improvement

Question 9

What is meant by labour intensive?

Answer 9

Production methods that make more use of labour relative to human workers

Question 10

What is labour productivity?

Answer 10

The amount of output each unit of labour produces

Question 11

What is outsourcing?

Answer 11

Giving work to sub-contractors to reduce costs

Question 12

What are the advantages and disadvantages of job production?

Answer 12

• quality is high because workers are skilled
• well motivated workforce
  BUT
• high labour costs (e.g. wages)
• time consuming and expensive

Question 13

What are the advantages and disadvantages of batch production?

Answer 13

• more use of machinery
• can change production depending on demand
• unit costs are lower (bulk buying)
  BUT
• small batches = high costs
• complex machinery needed

Question 14

What are the advantages and disadvantages of flow production?

Answer 14

• very low unit costs due to economies of scale
• output can be produced very quickly
  BUT
• huge set up costs
• low worker motivation
• difficult to change product

Question 15

What are some factors that influence productivity?

Answer 15

• motivation of workers - higher motivation = higher productivity and vice versa
• education and training
• labor flexibility - flexible workforces mean that all workers can do multiple tasks, improving productivity

Question 16

What are some factors influencing efficiency?

Answer 16

• outsourcing - reduces costs and allows the business to focus on other aspects of the product
• relocating - relocating may result in lower costs due to factors such as lower rent, wages and better transport links
• delayering - removing a level of hierarchy from the organisational structure may reduce costs and make a business more efficient as their will be less salaries to pay

Question 17

What are the advantages and disadvantages of capital intensive strategies?

Answer 17

• machinery is often more precise and consistent
• machinery can operate 24/7
• machinery is easier to manage
  BUT
• very high set-up costs
• huge costs and delays if machinery breaks down
• can be inflexible - may struggle to meet changes in demand

Question 18

What are the advantages and disadvantages of labour intensive strategies?

Answer 18

• more flexible e.g. can be retrained
• cheaper from small scale production
• gives an aspect of creativity and ability to solve problems and make improvements
  BUT
• people are harder to manage
• people can be unreliable
• people may become unmotivated

Question 19

What is meant by capacity utilisation?

Answer 19

Refers to the use that a business makes of its resources

Question 20

What is the formula for capacity utilisation?

Answer 20

Capacity utilisation = current output / maximum possible output (x100)

Question 21

What are the implications for under-utilisation?

Answer 21

• working with under-utilised capacity often means the businesses unit costs are not minimised
• low capacity utilisation may affect morale of workers
• they may feel that the business is struggling to generate orders which may lower motivation

Question 22

What are the benefits of under-utilisation?

Answer 22

• the business will be able to cope more easily with sudden increases in demand
• less likely to be less work-related stress as managers and workers will be more comfortable with their workload
• this can reduce sickness and absenteeism

Question 23

What are the drawbacks of over-utilisation?

Answer 23

• can put a strain on some of the resources and workforce
• may increase the risk of accidents or absence
• machines may also be over worked to breaking point, which can also be expensive to repair
• business may not be able to respond to changes in demand

Question 24

What are the benefits of over-utilisation?

Answer 24

• average costs will be lower because fixed costs will be spread across more units of output
• helps to improve competitiveness and raise profits
• staff motivation may be high if staff feel secure in their jobs
• can improve a company’s image

Question 25

What are some ways to improve capacity utilisation?

Answer 25

- Reducing capacity - a business may do this by rationalising, which is the process of getting rid of resources that the business can do without e.g. employees, unused fixed assets - increase sales - selling more means the business will have to produce more, leading to a rise in capacity utilisation

Question 26

What is buffer stock?

Answer 26

Stocks held as a precaution to cope with unforeseen demand.

Question 27

What factors may influence stock levels?

Answer 27

- demand - sufficient stocks need to be kept to satisfy normal demand, but also enough to over growth in sales and unexpected demand - the costs of stock holding - if stock is expensive to hold then only a small quantity will be kept - the type of stock - businesses can hold small stocks of perishable products. Stock can also become out of date when replaced by new models

Question 28

What are the implications of holding too much stock?

Answer 28

- opportunity cost - capital used to hold stock could be used to purchase other things, such as new machinery - storage - stock of raw materials, components and finished goods occupying pace in buildings which may be expensive. Some stock may need to kept in special conditions, which creates additional costs. - unsold stock - changes in demand may lead to businesses being left with stocks that it cannot sell.

Question 29

What are the implications of having too little stock?

Answer 29

- business may not be able to cope with unexpected increases in demand - delayed stock deliveries may lead to a halt in production

Question 30

What is Just-in-time (JIT) management of stock?

Answer 30

A lean production method where businesses only order stock just in time to be used.

Question 31

What are the advantages and disadvantages of JIT?

Answer 31

- improves cash flow since money is not tied up in stocks - lower stock holding costs - reduces waste BUT - advantages of bulk buying may be lost - unreliable suppliers may lead to delays in deliveries of goods - difficult to cope with sharp increases in demand

Question 32

What is waste minimisation?

Answer 32

Managing the amount of waste a business has

Question 33

What is lean production?

Answer 33

A waste minimisation approach that focuses on cutting out waste whilst ensuring quality

Question 34

Why are lean producers likely have a competitive advantage?

Answer 34

Because lean production: - raises productivity - reduces costs and cuts lead times - improves reliability and speeds up design time With these improvements, businesses can charge lower prices, offer better quality and reliability and fight off rivals

Question 35

What is quality assurance?

Answer 35

A method of working for businesses that takes into account customers’ wants when standardising quality. It often involves guaranteeing that quality standards are met

Question 36

What are quality circles?

Answer 36

Groups of workers meeting regularly to solve problems and discuss work issues.

Question 37

What is quality control?

Answer 37

Making sure that the quality of a product meets specified quality performance criteria.

Question 38

What is Total Quality Management (TQM)?

Answer 38

A managerial approach that focuses on quality and aims to improve the effectiveness, flexibility and competitiveness of the business.

Question 39

What is a way to remember the difference between quality control and quality assurance?

Answer 39

- Quality assurance aims to prevent defects with a focus on the PROCESSES used to make the product whereas quality control aims to identify defects in the FINISHED PRODUCT. - Quality control is a REACTIVE TASK.

Question 40

How may businesses gain a competitive advantage from quality management?

Answer 40

- improved product quality will help increase sales. - may help to cut business costs if faults are identified before the product reaches the market - can be used as the businesses USP = able to charge higher prices - this will give firms the competitive advantage to win customers from rivals, increase market share, raise revenue and improve profitability.