3.4.3 Flashcards
(22 cards)
How might excess capacity be viewed by a business as a negative?
- High costs due to waste
- Full behind demand
- Objective to profit maximise but increased unit costs
How might excess capacity be viewed by a business as a positive?
- Flexibility
- Time to train/maintain equipment
How can a business respond to excess demand?
- Outsource
- Subcontract
- Extend Factory
- Increase Prices
Why can a business experience problems at high capacity utilisation?
- Potential waste if demand is low
- Staff will be overworking
- Quality may decrease
List 4 ways a business can increase capacity
- Extend factory
- Outsource
- Hire more staff or offer overtime
- Subcontract
What issues may arise if a business decides to outsource to other producers?
- Flexibility issues
- Not meet standards
- Harder to measure quality
- Less control
- Increased costs
- Could impact reputation
How can productivity be improved?
- Training
- Set targets
- Increase motivation
- Better quality raw materials
- Better capital equipment
- More capital equipment
What are some difficulties with improving labour productivity?
- Quality may fall
- Redundancies may impact brand image
- Customer satisfaction may fall
- Demand for higher pay
What is capital intensive? List 2 pros and cons
= Using significantly more machinery during production
+ High productivity
+ Technical economies of scale
- Risk of technical issues
- High start up costs
What is labour intensive? List 2 pros and cons
= Using significantly more labour during production
+ Cheap
+ Easier to find replacements/adaptable
- Time consuming (training)
- No consistency
What does the resource mix (being capital or labour intensive) depend on? List at least 4
- Finance available
- Quality of product
- Type of product
- Method of production
- Number of output
- Technology available
- Location of the business
What is technology? List 4 types of technology
= Machinery that is used to enhance a businesses operational efficiency
- Computer aided manufacture (CAM)
- Computer aided design (CAD)
- Electronic point of sale (EPOS)
- Artificial intelligence (AI)
List 2 pros and cons of using technology
+ Improve stock management
+ Lower defect rate
- Costly
- Technical issues
What is lean production?
An efficient form of production that keeps waste to a minimum. It aims to achieve zero delays, stocks, mistakes, waiting time and accidents
How does improving quality reduce waste?
Less likely to break/be damaged = Less recalls = Less waste
How does reducing the amount of inventory held reduce waste?
Reduces risk of stock not being sold = Less waste
How does reducing the time items are waiting for something to happen to them reduce waste?
Reduces risk of perishable stock going bad = Less waste
Producing quicker = Less delay = More efficient = Less waste
How does reducing the time when items are moving from one stage of process to another reduce waste?
More products can be made at once = More efficient = Less waste
What are 5 methods a business can use to become leaner?
- Time-based management = Reducing the time required to complete processes
- Cell production = Organising workstations into smaller groups, reducing movement and waiting time
- Benchmarking = Comparing a company’s performance processes and practices with competitors
- Kaizen = Continuous improvement to processes
- JIT Production = Receiving goods only as they are needed
What is JIT production? List 2 pros and cons
= Receiving goods only as they are needed. Make whats needed when we need it
+ Less waste
+ Lower costs
- Hard to meet unexpected spikes in demand
- Potential supplier delay
What is JIC production? List 2 pros and cons
= Receiving goods before we need it. Make all we can just in case
+ Won’t run out of stock
+ Less dependant on suppliers
- High costs (warehouses)
- Higher waste
List at least 2 difficulties of implementing lean production
- Employees may go on strike
- Supplier may fail to deliver when expected
- Employees may not be engaged
- Employees may be fearful to send back work when it isn’t good enough
- Little investment in communications and technology with suppliers
