2.4 Resource Management

Question 1

Methods of Prodution

Answer 1

1. Job production
2. Batch production
3. Cell production
4. Flow production

Question 2

Define Job production

Answer 2

Producing one item at a time, as ordered by the customer

Question 3

Adv. of job production

Answer 3

1. High quality products
2. Motivated and highly skilled workers
3. Customised products can be produced

Question 4

Disadv. of Job production

Answer 4

Production is slow

Labour costs are high

Question 5

Define Batch production

Answer 5

Groups of the same product are produced, before moving on to a group of different products

Question 6

Adv. of Batch production

Answer 6

1. Lower unit costs than job production – Making items in batches allows some economies of scale (e.g. bulk buying materials).
2. Flexibility – Different products or variations (e.g. sizes, flavours, colours) can be made in separate batches.
3. Good for moderate demand – Suits businesses that can’t justify full flow production but need more than job production offers.
4. Allows quality checks between batches – Problems can be identified before starting the next batch, reducing overall waste.
5. Specialisation of labour – Workers can become skilled at specific tasks within the batch process, increasing productivity.

Question 7

Disadv. of Batch production

Answer 7

1. Downtime between batches – Time is wasted when switching between batches (e.g. cleaning machines, changing tools), which reduces efficiency.
2. Higher unit costs than flow production – It’s less efficient than continuous flow production, so unit costs tend to be higher.
3. Storage costs – Finished batches may need to be stored before being sold, especially if demand is unpredictable.
4. Less flexibility to individual customer needs – Products are made in set batches, so customization is limited.
5. Risk of waste – If a batch is produced based on inaccurate demand forecasts, it might not sell, leading to wasted stock.
6. Motivation issues – Workers may find the repetitive nature of batch work boring, leading to lower motivation and productivity.

Question 8

Define Flow production

Answer 8

Continuous manufacturing of standardised products, usually on a production line

Question 9

Adv. of Flow Production

Answer 9

1. Low unit costs – Mass production leads to economies of scale, so the cost per unit is much lower.
2. High output levels – Flow production is continuous, meaning large volumes can be produced quickly to meet high demand.
   3.Efficient use of labour and machinery – Specialisation and automation boost productivity and reduce errors.
3. Consistent product quality – The standardised process ensures uniformity across all units.
4. Less need for skilled labour – Tasks are often repetitive or automated, so training costs are lower.

Question 10

Disadv. of Flow production

Answer 10

Customisation is difficult

Capital equipment can be expensive to purchase

Question 11

Define Cell Production

Answer 11

This involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process

Question 12

Adv. of Cell production

Answer 12

Cell production is often more efficient than other methods as workers share their skills and expertise

Motivation is usually high as employees work as a team

Question 13

Disadv. of Cell production

Answer 13

Requires extensive reorganisation of production processes

Teams efficiency may be reduced by weaker workers

Question 14

Labour Productivity formula

Answer 14

Labour productivity= Output/ No. of workers

Question 15

Capital productivity formula

Answer 15

Output/ No. of Machines

Question 16

Factors that influence productivity

Answer 16

1. Employee motivation
2. Skills, education & training staff
3. Business organisation & working practices
4. Investment in capital equipment

Question 17

Define Competitiveness

Answer 17

Competitiveness refers to the ability of a business to maintain or grow its sales and market share given the presence and actions of rivals

Question 18

Factors that can influence business efficiency

Answer 18

1. Standardisation of the production process
2. Relocation or downsizing
3. Investment in capital equipment
4. Organisational restructuring
5. Outsourcing
6. Adoption of lean production techniques

Question 19

Define Labour-intensive production

Answer 19

Labour-intensive production predominantly uses physical labour in the production of goods/services

Question 20

Define Capital-intensive production

Answer 20

Capital-intensive production predominately uses machinery and technology in the production of goods and services

Question 21

Adv. of Capital intensive production

Answer 21

Low-cost production where output is high

Machines are usually consistent and precise

Machines can run without breaks

Question 22

Disadv. of Capital intensive production

Answer 22

Significant set-up and maintenance costs

Breakdowns can severely delay production

May not provide flexibility in production

Question 23

Adv. of Labour intensive production

Answer 23

Low-cost production where labour costs are low

Provides opportunities for workers to be creative

Workers are flexible (e.g. they can be retrained)

Question 24

Disadv. of Labour intensive production

Answer 24

Workers may be unreliable and need regular breaks

Incentives may be needed to motivate staff

Training costs can be significant

Question 25

Define Capacity Utilisation

Answer 25

Capacity utilisation is measure of the level to which a businesses assets are being used to produce output

Question 26

Capacity utilisation formula

Answer 26

Current output/ maximum potential output X 100

Question 27

Implication of Under-utilisation of capacity

Answer 27

If a business has a low level of capacity utilisation, it will not be making the most of its resources and is likely to have increased unit costs Fixed costs are spread over fewer units of output, resulting in higher average total costs Workers may be under-deployed leading to fears of redundancy

Question 28

Implications of Over-utilisation of capacity

Answer 28

If a business has a high level of capacity utilisation, it may not have the flexibility to respond to new orders from customers Staff will be under a lot of pressure to produce high levels of output Overworked staff may be inclined to leave, increasing staff turnover Machinery may be pushed to its limits and prone to breakdowns, which disrupts production and increase costs

Question 29

Ways of improving capacity utilisation

Answer 29

1. Increase sales 2. Increase usage 3. Outsourcing 4. Reduce capacity 5. Redeployment

Question 30

Define Buffer stock

Answer 30

Buffer stock is a quantity of goods/raw materials kept in case of stock shortages

Question 31

Adv. of holding Buffer stock

Answer 31

Stability in supply Buffer stocks ensure a stable supply of goods which is able to respond to unexpected customer demand Price stabilisation Buffer stocks can help prevent extreme price fluctuations as it helps the market to avoid shortages, which would result in rapid price increases Raw materials security Businesses that are dependent on particular raw materials avoid disruption to their supply Competitive advantage By having a reliable supply of goods, businesses can gain a reputation for always being able to meet the needs of their customers

Question 32

Disadv. of holding Buffer stock

Answer 32

Cost Holding buffer stocks can be expensive, as it requires storage facilities and inventory management systems Risk of obsolescence Buffer stocks can become obsolete if the demand for a particular product or input declines Opportunity cost Holding buffer stocks ties up capital that could be invested in other areas of the business

Question 33

Implications of poor stock control

Answer 33

1. Holding too much stock 2. Holding too little stock

Question 34

Define Just in time stock management (JIT)

Answer 34

Just in Time (JIT) stock management is a process in which raw materials are not stored onsite Stock is ordered as required, and delivered by suppliers 'just in time' for production

Question 35

Adv. of JIT stock management

Answer 35

Stockholding costs, including storage costs, are minimised Close working relationships are developed with a small number of trusted suppliers Cash flow is improved as money is not tied up in stocks Unused storage space is available for productive use Teamwork is encouraged so employee motivation is likely to be improved

Question 36

Disadv. of JIT stock management

Answer 36

Bulk buying economies of scale are not generally possible The ability to respond to unexpected increases in demand is reduced Administrative costs related to frequent ordering are increased Unreliable suppliers (e.g. late or poor quality deliveries) can quickly halt production Significant changes to organisational structure and production controls are required

Question 37

Reasons for waste

Answer 37

Stock becomes obsolete unless used by a particular date Perishable stock (food and medicines) that is not used before they deteriorate will need to be thrown away Stock may be damaged as a result of poor storage conditions and may not be suitable for use in the production process

Question 38

Ways to minimise waste

Answer 38

1. Storage 2. Planning 3. Sales tactics

Question 39

Define Lean production

Answer 39

Lean production involves the minimisation of the resources used in production

Question 40

Competitive adv. from lean production

Answer 40

Lower unit costs are achieved due to minimal wastage, so prices may be lower than those offered by competitors Better quality of output is likely as a result of supplier reliability and carefully managed production processes

Question 41

Adv. of Lean production

Answer 41

Less time is required as the production process is organised in the most efficient way Fewer materials are used as there is a focus on waste reduction Less labour is used as lean production is typically capital intensive The space required for production is reduced as a result of just in time stock management A small number of trusted suppliers work closely with the business

Question 42

Methods of Quality management

Answer 42

1. Quality control 2. Quality assurance 3. Quality circles 4. Total quality management (TQM)

Question 43

Define Quality control

Answer 43

Inspecting the quality of output at the end of the production process

Question 44

Benefits of Quality control

Answer 44

Quality specialists are employed to check standards An inexpensive and simple way to check that output is fit for purpose

Question 45

Drawbacks of Quality control

Answer 45

The rejection of finished goods is a significant waste of resources There is little focus on the cause of defects

Question 46

Define Quality assurance

Answer 46

Inspecting the quality of production throughout the production process

Question 47

Benefits of Quality assurance

Answer 47

Quality issues are identified early so products may be reworked rather than rejected The cause of defects is the focus so future quality issues may be prevented

Question 48

Drawbacks of Quality assurance

Answer 48

Staff training and a skilled workforce is required so labour costs may be increased Reworking may lengthen the production proces

Question 49

Define Quality circles

Answer 49

Groups of workers meet regularly to solve quality problems identified in the production process

Question 50

Benefits of Quality circles

Answer 50

Workers may be motivated as they are involved in decision making Relevant and focused solutions are likely as workers are familiar with processes

Question 51

Drawbacks of Quality circles

Answer 51

Management need to have trust in workers’ views and solutions Meetings and structures must be organised regularly

Question 52

Define Total quality management (TQM)

Answer 52

Organisation of the business with quality at its core and with every worker responsible for quality

Question 53

Benefits of TQM

Answer 53

Quality in all aspects of the business improves efficiency A culture of constant improvement exists within the business

Question 54

Drawbacks of TQM

Answer 54

All workers must be committed and receive significant continued training Careful monitoring and control is required

Question 55

Define Kaizen

Answer 55

Kaizen involves a business taking continuous steps to improve productivity through the elimination of all types of waste in the production process

Question 56

Elements of Kaizen:

Answer 56

1. Total Quality Management 2. Just in Time stock management 3. Teamwork and quality circles 4. Zero defects in manufacturing 5. High levels of automation 6. High levels of cooperation between workers and management