4.1 Production of goods and services Flashcards

1
Q

How to manage resources effectively to produce goods and services?

A
  • Use resources in the most cost-effective way
  • Produce the required output to meet consumer demand
  • Meet the quality standard expected by consumers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Productivity

A

measure of the efficiency of inputs used in production process, especially labour and capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How to calculate productivity?

A

Quantity of outputs / quantity of inputs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How to calculate labour productivity?

A

Total output / number of employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Production

A

process of converting inputs such as land, labour and capital into saleable goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the benefits of increasing efficiency and how to increase it?

A
  • Lower average costs - cost of producing each unit of output
  • Increased output relative to inputs required
  • Fewer workers possibly needed, lower wage costs
  • Higher wages for workers increased motivation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How to improve labour productivity?

A

Improving skill level
Improving motivation (bonus, incentives, job enrichment, etc.)
Introducing more automation and better technology
Improving quality of management decisions
Lean production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What do inventories include?

A
  • Raw materials and components needed for production
  • Work-in-progress, which are partly finished goods that have not yet completed the production process
  • Finished goods ready to be sold or sent out to customers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What do costs of inventories include?

A
  • Warehousing costs: the business will need to rent or purchase a warehouse to store the inventories
  • Handling costs: Inventories need to be moved out of the warehouse
  • Shrinkage costs: Damaged, lost or stolen inventories will need to be replaced
  • Insurance costs: These will cover the cost of losses from shrinkage
  • Obsolescence: The business may not be able to sell out of date goods
  • Opportunity cost: Working capital is tied up in inventories which could be used more profitably by the business
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Lean production

A

production of goods and services with the minimum waste of resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Potential waste in production

A

Overproduction (high storage costs, damage to goods in storage)
Waiting
Transportation (causes waste, cost potential damage)
Unnecessary inventory
Motion (waste time)
Over-processing
Defects

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are methods of lean production?

A
  • Just In Time (JIT)

- Kaizen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Just In Time (JIT)

A

Just in time is the name of the method of using very little inventory (stock of components using in production) so that you only order what you need, when you need it
The raw materials or components are delivered just in time for when you need them.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Advantages + disadvantages of JIT

A

+ reduces the cost of holding inventory
+ saves space in warehouses
+ cash flow is better because money isn’t tied up in parts that have not been used yet
- supplier might not deliver materials in time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Kaizen

A

Means ‘continuous improvement” in Japanese and it is focused on the elimination of waste.
The improvement comes from the workers themselves.
-> Meet regularly to discuss problems and possible solutions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Advantages + disadvantages of Kaizen

A

+ increased productivity
+ reduces amount of space needed for the production process
+ work-in-progress is reduced
+ improved layout of factory floor allow some jobs to be combined, freeing up employees to carry out other jobs
- time consuming
- plans need to be carefully thought out

17
Q

What are the main methods of production?

A

Job production
Batch production
Flow production

18
Q

Job production

A

where a single product is made at a time

19
Q

Advantages + disadvantages of job production

A

+ unique, high quality
+ workers are often motivated and take pride in their work
- economies of scale are not possible
- product can take a long time and can be expensive
- uses skilled labour rather than machinery so selling prices are higher

20
Q

Batch production

A

manufacturing items in sets for a particular length of time, before switching the manufacturing line to produce a different type of set

21
Q

Advantages + disadvantages of batch production

A

+ lower unit costs
+ materials can be bought in build so cheaper
+ offers customer some variety of choice
- workers are often less motivated because work is repetitive
- goods have to be stored until they are sold -> expensive

22
Q

Flow production

A

continuous production of large quantity of goods by an automated process

23
Q

Advantages + disadvantages of flow production

A

+ capital intensive which lowers labour costs
+ bulk buying of materials so cheaper
+ large number of goods are produced
- requires large capital investment in production line
- high levels of raw material -> inventories -> increases costs
- inflexible
- repetitive

24
Q

How has technology changed production methods?

A

Technology has increased production efficiency by producing less waste because computers make less mistakes than humans do

  • More cost effective
  • Decreases labour costs
  • Computer aided designs: fast way of producing designs of a product