2.4.1 Production, Productivity And Efficiency

Question 1

What factors determine what method of production a business uses?

Answer 1

• the level of output required to be produced
• the nature of the product
• whether the product is standardised or customised
• the level of automation used in production

Question 2

What is job production?

Answer 2

• producing one item at a time, as ordered by the customer

Question 3

Advantages of job production

Answer 3

• high quality product
• motivated and highly skilled workers
• customised products can be produced

Question 4

Disadvantages of job production

Answer 4

• production is slow
• labour costs are high

Question 5

What is batch production?

Answer 5

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

Question 6

Advantages of batch production

Answer 6

• workers can specialise
• production can take place as the previous batch starts running out

Question 7

Disadvantages of batch production

Answer 7

• requires careful coordination to avoid shortages
• money is ties up. In stock as completed products need to be stored

Question 8

What is flow production?

Answer 8

• continuous manufacturing of standardised products, usually on a production line

Question 9

Advantages of flow production

Answer 9

• low unit costs due to economies of scale
• rapid production
• usually high automated = capital intensive

Question 10

Disadvantages of flow production

Answer 10

• customisation it’s difficult
• capital equipment can be expensive to purchase

Question 11

What is cell production?

Answer 11

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

Question 12

Advantages 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

Disadvantages of cell production

Answer 13

• requires extensive reorganisation of production process
• teams efficiency may be reduced by weaker workers

Question 14

What is productivity?

Answer 14

• the output per input per hour

Question 15

What is the labour productivity?

Answer 15

• a measure of the output over worker during a specific period of time
  Output / number of workers

Question 16

What is capital productivity?

Answer 16

• a measure of the output of capital employed during a specific period of time
  Output / number of machines

Question 17

Factors that influence productivity: employee motivation

Answer 17

• motivated workers tend to be more productive
  
  • financial incentives linked to output may increase worker productivity
  • non-financial incentives may include workers in decision-making and increase their commitment and productivity

Question 18

Factors that influence productivity: skills, education & training staff

Answer 18

• well-trained and educated workers are likely to be able to make useful contributions to decisions that improve productivity
  
  • workers are more autonomous so the need for supervision is reduced
  • contributions from knowledgeable staff are likely to lead to improvements in productivity

Question 19

Factors that influence productivity: business organisation & working practices

Answer 19

• flexible and adaptable workplaces can improve the commitment of workers and allow a business to respond to changed in demand
• hours and locations of work can be adapted to better meet the needs of workers and demand
• workstations may be used for various purposes with carful planning and training

Question 20

Factors that influence productivity: investment in capital equipment

Answer 20

• increased automation can improve levels of output and quality
  
  • well chose machinery is less likely to make mistakes than humans
  • machinery and technology can operate for long periods with out a break as long as it is properly maintained

Question 21

The link between productivity and competitiveness

Answer 21

• competitiveness = the ability of a business to maintain or grow its sales and market share given the presence and actions of rivals
• businesses that increase their level of productivity are likely to be more competitive
• businesses that are competitive are likely to have the financial resources required to continue investing in improvements to their productivity

Question 22

Understanding efficiency

Answer 22

• the ability of a business to use its production resources as cost-effectively as possible
  
  • it is often measured in terms of the average cost per unit
  • average cost per unit = total costs / number of units
• maximum efficiency is achieved when the cost per unit is at its lowest

Question 23

Factors that influence efficiency: standardisation of the production process

Answer 23

• occurs when all staff use the same components and techniques in the production process
  
  • training of workers is minimised
  • bulk-buying of components reduces variable costs
  • production time is reduced
  • BUT customisation of products is not usually possible

Question 24

Factors that influence efficiency: relocation or downsizing

Answer 24

• moving production to a cheaper or smaller location can reduce fixed costs
  
  • labour-intensive businesses may look for lower wage locations
  • capital-intensive locations may look for lower rents or land costs
  • however, relocation is very disruptive and will incur significant short-term costs

Question 25

Factors that influence efficiency: investment in capital equipment

Answer 25

- purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality

Question 26

Factors that influence efficiency: organisational restructuring

Answer 26

- reducing the level of staff or reorganising staff cons better match labour to output needs - delayering reduces labour