2.4.1 Flashcards
Production, Productivity and Efficiency (29 cards)
What is job production?
○ Only one product is produced at a time
○ Used when orders for products are small
○Examples: Baking cakes, Crossrail
Benefits of job production?
○ Quality of production is high
○ Varied work means workers are more motivated
○ Products can be custom made more easily
Negatives of job production?
○ Higher labour costs
○ Production times may be slower
○ Generally this is an expensive method of production
What is batch production?
○ Used when demand for a product is regular
○ Example: Furniture
○ Production is carried out in operations, the same process is done to the entire batch at the same time
Benefits of batch production?
○ Workers specialise in one operation of the production
○ Unit costs are lower because of a higher output
○ Production is flexible as different orders can be met
Negatives of batch production?
○ Careful planning and co-ordination is required
○ If batches are only small, unit costs can still be high
○ Money can be tied up in work-in-progress
What is flow production?
○ Different operations are carried out one after the other in a continuous sequence
operation to the next along a conveyer belt
○ Uses a semi-skilled workforce only specialising in one operation of production
○ Large amount of machinery and equipment are used
○ Large stocks of raw materials and compound are used
○ Examples: Newspapers, food, cement, cars etc
Benefits of flow production?
○ Very low unit costs due to the economy of scale
○ Output can be produced very quickly
○ Modern machines can allow for more flexibility
○ Production speed can be varied according to the current demand
Negatives of flow production?
○ Products may be too standardised
○ Huge set-up costs have to be incurred before production can even begin
○ Breaks in production can prove very expensive
What is cell production?
○ Workplace is divided into cells, each cell is concerned with the production of ‘product families’, which are groups of products which require a sequence of similar operations
○ Inside a cells machines are grouped together in order to complete one good from start to finish
Benefits of cell production?
○ Product flexibility is increased
○ Lead times are able to be reduced
○ Team working is encouraged
Negatives of cell production?
○ A firm may not be able to use machinery as efficiently compared to flow production
○ Output will be lower than mass production
○ More investment and planning is required in a new management and control process
What is productivity?
Measurement between inputs into the production process and the resultant outputs, such as:
→ Output per worker
→ Output per hour/day/week/month/year
→ Output per machine
How do you calculate unit cost?
Divide total costs by the number of units produced. This measures the average cost per unit produced, as measured over a particular time period
What are economies of scale?
Cost advantages that a business can exploit by expanding their scale of production. Most businesses find that, as production output increases, they can achieve lower costs per unit.
What are the 6 types of economies of scale?
Technical Specialisation/managerial Purchasing Financial Marketing Risk bearing
What effect does specialisation/managerial economies of scale have on a business?
Larger businesses can split complex production processes into separate task and specialised teams, therefore greater specialisation and productivity at the same time
What effect do technical economies of scale have on a business?
Large business can invest in economy of scale in expensive specialist equipment/machinery e.g. Tesco may invest in expensive stock control technology
What effect do marketing economies of scale have on a business?
Larger business can spread advertising/marketing budget over a larger output
Examples of labour intensive businesses?
Hotels, fruit farming, hairdressing
Features of labour intensive businesses?
- Labour costs higher than capital costs
- Costs are mainly variable = lower breakeven output
- Firms benefit from access to sources of low-cost labour
Examples of capital intensive businesses?
- Transport companies
- Oil refinery
- Car manufacture
Features of a capital intensive business?
- Capital costs higher than labour costs
- Costs are mainly fixed = higher breakeven output
- Firms benefit from access to low-cost, long-term financing
Benefits of labour intensity?
- Can outsource to low labour cost areas
- Can have a specialised workforce
- Lower break even point
- They can be trained to work in more than one area
- Ideas of workers can help improve production
