2.4 - Resource Management Flashcards
(32 cards)
Production
The transformation of resources into finished goods or services.
4 methods of production
Job production
Flow production
Batch production
Cell production
Job production
Producing one item at a time, as ordered by the customer.
Advantages and Disadvantages of job production
Adv - High quality, motivated and skilled workers, customised products.
Dis - Slow production and high labour costs.
Batch production
Groups of the same product are produced, before moving on to a group of different products.
Advantages and disadvantages of Batch production
Adv- workers can specialise, production can take place as the previous ‘batch’ starts running out.
Dis- Require careful coordination to avoid shortages, money is tied up in stock as completed products need to be stored.
Flow production
Continuous manufacturing of standardised products, usually on a production line.
Advantages and disadvantages of flow production
Avd- Low unit costs due to economies of scale, rapid production, usually automated (capital intensive).
Dis- customisation is difficult, capital equipment can be expensive to purchase.
Cell production
Involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process.
Advantages and disadvantages of Cell production
Adv- more efficient as workers share skills and expertise, motivation is high due to teamwork.
Dis- extensive reorganisation of production process, team efficiency reduced by weaker workers.
labour productivity
Measure of output per worker during a specific time period
Labour productivity formula
Labour productivity = output/no. of workers
Capital productivity
Measure of the output of capital employed (e.g. machinery) during a specific period of time.
Capital productivity formula
Capital productivity = output/no. of machines
Factors influencing productivity
Employee motivation, staff training, investment in capital equipment.
Efficiency
The ability of a business to use its production resources as effectively as possible.
Efficiency calculation
Efficiency = total costs/no of units.
Capacity utilisation
A measure of the level to which a businesses assets are being used to produce output.
Capacity utilisation formula
(Current output/maximum possible output) x100
Under-utilisation
Fixed costs spread over fewer units of output resulting in higher average total costs, workers may be under-deployed leading to fears of redundancy.
Over-utilisation
Staff under high pressure to produce high levels of output, overworked staff may be inclined to leave increasing staff turnover
5 ways to reduce capacity utilisation
Outsourcing
Reduce capacity
Redeployment
Increase sales
Increase usage
Stock control diagram
Buffer stock
A quantity of goods/raw materials kept in case of stock shortages.
Can provide competitive edge over rivals unable to meet demand.
