4.3 Improving Efficiencies/ Lean Production

Question 1

What is capacity utilisation and what does it measure

Answer 1

The percentage of a businesses capacity that is actually being used
Measures what percentage of the max possible output is actually produced

Question 2

Capacity utilisation formula

Answer 2

Actual (current) output / maximum (possible) output x100

Question 3

What is the ideal capacity utilisation and why

Answer 3

90%
Leaves room for unexpected demand or sudden growth/ opportunities
Allows for downtime (replacing machines)
Anything less isn’t efficient

Question 4

Potential consequences of having a CU at 90%

Answer 4

Might still not be enough flexibility to meet surges in demand
Production may be rushed
Strain on resources

Question 5

Pros of CU being at 90%

Answer 5

Unit costs will be lower therefore more competitive
Can balance optimised capacity utilisation with flexibility
Can plan downtime and maintenance

Question 6

How to improve capacity utilisation

Answer 6

Reduce overall capacity (relocate, sell assets, redundancy)
Increase usage/output (discounts on certain days , promotions , make more products)
Outsourcing (handing over control and responsibility)
Redeployment (work in another department or branch where needed)

Question 7

What is lean production

Answer 7

An approach to management that focuses on cutting out waste , while ensuring quality

Question 8

8 types of waste

Answer 8

Transportation
Inventory
Motion
Waiting
Overproduction
Over processing
Defects skills

Question 9

What is the lean production method kaizen

Answer 9

Employees constantly make incremental changes to improve quality or efficiency

Question 10

Pros of kaizen

Answer 10

Reduces risk
Reduces waste
Higher capacity utilisation
More energy efficient
More accurate information

Question 11

What is the just in time method of lean production

Answer 11

Stock arrives just in time for manufacturing , production or sale

Question 12

What are the costs of holding stock

Answer 12

Rent
Utilities
Perishable stock
Employees

Question 13

Pros of just in time method of lean production

Answer 13

Improves cash flow
Decreases depreciation value
No storage costs

Question 14

Cons of just in time method of lean production

Answer 14

Doesnt cope well with sudden changes in demand
Little room for error
Risk of communication breakdowns

Question 15

What is just in case

Answer 15

Always having a set level of buffer stock ready for orders

Question 16

What are quality circles

Answer 16

Small group of employees that can meet regularly to look at how quality can be improved
Their feedback and recommendations are passed to management for possible implications

Question 17

Pros of quality circles

Answer 17

Improve quality culture
Involves and motivates employees
Employees can feel more valued
Multiple viewpoints
Cheap as no extra pay

Question 18

Cons of quality circles

Answer 18

Takes time out of staffs day
Only works if staff are willing
Not experts
No value if feedback is not taken into account

Question 19

What are the 4 production methods

Answer 19

Job production
Batch production
Flow production
Cell production

Question 20

Points about job production

Answer 20

One off products
Focus on customer needs
Individual service
Skilled workforce
More expensive

Question 21

Batch production

Answer 21

Larger volume
Some flexibility
Semi skilled workforce
Some levels of automation

Question 22

Flow production

Answer 22

High volumes
High productivity
Standardised production
Low skilled workforce
Highly automated

Question 23

What is cell production

Answer 23

The production line is organised into small teams (cells), with each cell developing a responsibility for s significant part of the finished product

Question 24

Benefits of cell production

Answer 24

Good communication within cells
Workers become multi skilled and adaptable
Greater worker motivation
Improvements in quality

Question 25

Drawbacks of cell production

Answer 25

Invest in new materials suitable Small scale production lines may not be able to switch to cell as it isn't economically worthwhile They need to have the right amount of work Recruitment and training needs to support the approach

Question 26

What is total quality management (TQM)

Answer 26

Puts quality at the heart of everything in the business All employees are involved in the quality control and take responsibility for their own work Getting it right first time every time

Question 27

Pros of capital intensive

Answer 27

No employees to get sick , take breaks , feel demotivated Take shortcuts, consistent , reliable production Less waste and defects Likely to be cost effective in the long term

Question 28

Cons of capital intensive

Answer 28

Initial cost of capital Machinery tends to be inflexible

Question 29

Pros of labour intensive

Answer 29

Likely to be cheaper on smaller scale production Labour can do some jobs that capital cannot do Supports kaizen / TQM structures

Question 30

Cons of labour intensive

Answer 30

Breaks, holidays , need to manage humans Recruitment costs if increase in staff turnover