2.4.1 Production, Productivity & Efficiency

Question 1

What are the 4 methods of production?

Answer 1

Job Production
Batch Production
Flow Production
Cell Production

Question 2

What is job production?

e.g royal suits made

Answer 2

Manufactures produce one product at a time as ordered by the customer

Question 3

What are the advantages and disadvantages of job production?

Answer 3

Advantages:
* High quality Product
* Motivated & highly skilled workers
* Customised products can be produced

Disadvantages
* Production is slow
* Labour costs are high

Question 4

What is flow production?

e.g. clothes

Answer 4

Continuous manufacturing of standardised products usually on a production line

Question 5

What are the advantages & disadvantages of flow production?

Answer 5

Advantages:
* Low unit costs due to economics of scale
* Rapid production
* Usually highly automated (efficient)

Disadvantages:
* Customisation is difficult
* Captial equipment can be expensive to purchase

Question 6

What is batch production?

e.g. 1000 breadrolls/blueberry muffins

Answer 6

Groups of the same product are produced as a batch

Question 7

What are the advantages and disadvantages of batch production?

Answer 7

Advantages:
* Workers can specialise & able to make use of division of labour- hiring workers specialise in one stage of production process
* Production can take place as the previous ‘batch’ starts running out

Disadvantages:
* Requires careful coordination to avioid shortages
* Greater potential for defects
* Completed products need to be stored

Question 8

What is cell production?

Answer 8

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

Question 9

What are the advantages and disadvantages of cell production?

Answer 9

Advantages:
- Cell production is often more efficient than other methods as workers share their skills & expertise
- Motivation is usually high as employees work as a team

Disadvantages:
- Requires extensive reorganisation of production processes
- Teams efficiency may be reduced by weaker workers

Question 10

Define ‘productivity’

Answer 10

The output per input (person or machine) per hour

e.g. an Ikea worker is able to produce 2 Poāng chairs per hour

Question 11

What are the two subcategories of productivity?

Answer 11

• Labour productivity
• Captial productivity

Question 12

What is labour productivity?

Answer 12

A measure of the output per worker during a specific period of time

Question 13

What is the formula used to calculate labour productivity?

Answer 13

Output/Number of workers

Question 14

What is ‘capital productivity’

Answer 14

A measure of the output of capital employed (e.g. machinery) during a specified period of time

Question 15

What is the formula for capital productivity?

Answer 15

Output/number of machines

Question 16

What happens when productivity increases?

Answer 16

• Business costs decrease

When business costs decrease the firm can either pass on this decrease to consumers in the form of lower prices - or maintain the selling prices and enjoy higher profit margins

Question 17

What factors are there that influence productivity?

Answer 17

• Employee motivation
• Skills, educating & training staff
• Business organisation & working practices
• Investment in capital equipment

Question 18

How does employee motivation influence productivity?

Answer 18

• 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, increase their commitment & productivity

Question 19

How does skills,education & training staff influence productivity?

Answer 19

• Well-trained and educated workers are likely to be able to make useful contributions to decisions that improve productivity
• (as well as being good & productive at their job)

Question 20

How does business organisation & working practices influence productivity?

Answer 20

• Flexible and adaptable workplaces can improve the commitment of workers
  and allow a business to respond to changes in demand

Question 21

How can investment in capital equipment influence productivity?

Answer 21

• Increased automation can improve levels of output and quality
• Well chosen machinery is less likely to make mistakes than humans
• Machinery and technology can operate for long periods without a break as long as it is properly maintained

Question 22

Define ‘competitiveness’

Answer 22

• Refers to the ability of a business to maintain or grow its sales & marketshare given the prescence & actions of rivals

Question 23

What is the link between competitiveness & productivity?

Answer 23

Businesses that increase their level of productivity (e.g of workers or capital equipment) are likely to be more competitive

Question 24

Define ‘efficiency’

Answer 24

• Refers to the ability of a business to use it’s production resources as cost-effectively as possible

Question 25

What is the formula for efficiency?

Answer 25

Total costs/Number of units | efficiency is often measured in terms of the average cost per unit

Question 26

How is maximum efficiency achieved?

Answer 26

When the cost per unit is at it's lowest

Question 27

What are economies of scale?

Answer 27

A proportionate saving in costs gained by an increased level of production

Question 28

What factors can influence business efficiency?

Answer 28

* Standardisation of the production process * Relocation or downsizing * Investment in capital equipment * Organisational restructuring * Outsourcing * Adoption of lean production techniques

Question 29

How can standardisation of the production process influence efficiency?

Answer 29

* Occurs when all staff use same components & techniques in the production process Production lead time is reduced & Training of workers is minimised

Question 30

How does relocating or downsizing influence efficiency?

Answer 30

Moving production to a cheaper or smaller location can reduce fixed costs Labour-intenisve businesses may look for lower wage locations However relocation is v disruptive & will incure significant short-term costs

Question 31

How does investment in captial equipment influence efficiency?

Answer 31

Purchasing or upgrading machinery & technology can increase the rate of output, lower costs & improve quality

Question 32

How can organisational restructuring influence efficiency?

Answer 32

* Reducing the level of staff or reorganising staff can better match labour to output needs * Delayering reduces labour costs as levels of management are removed--> increasing efficiency as you upgrade your employees skill set that a bigger workforce may need- paying less employees but who are highly skilled

Question 33

How can outsourcing influence efficiency?

Answer 33

* Tasks may be given to other business who can complete it at a lower cost Outsourcing allows a business to focus on improving the efficiency of its core competences

Question 34

How can an adaptation of lean production technqiues improve efficiency?

Answer 34

An approach to production that involves the reduction to all types of wastage (time,resources & space): e.g. Kaizen-improvement are made continuously JIT-holding little to no stock-minimising storage costs

Question 35

What is labour intensive production?

Answer 35

* Predominantly uses physical labour in the production of goods and services Delivery of services is usually more labour intensive than manufacturing e.g. schools are labour-intensive operations as teachers plan and deliver lessons and provide pastoral support ## Footnote countrys where labour costs are low e.g. bangladesh labour intensive production is common

Question 36

What is capital-intensive production?

Answer 36

* Predominately uses machinery & technology in the production of goods/services * Manufacturing in developed countries where labour costs are relatively high is likely to be capital intensive e.g. Automative manufacturers such as Ford use robots and other production technology to manufacture vehicles with supervisors overseeing the quality of output

Question 37

What are the advantages & disadvantages of capital intensive production?

Answer 37

**Advantages:** - Low cost production where output is high - Machines are usually consistent & precise - Machines can run without breaks/days off (unlike employees) **Disadvantages:** - High set up & maintenance costs - Breakdowns can severely delay production - May not provide flexibility in production

Question 38

What are the advantages & disadvantages of labour intensive production?

Answer 38

**Advantages:** * Low cost production when labour costs are low * Provides opportunities for workers to be creative * Workers are flexible (e.g. they can be trained) **Disadvantages:** * Workers may be unreliable & need regular breaks * Incentives may be needed to motivate staff * Training costs can be significant