Methods Of Production

Question 1

budgeting

Answer 1

Budgeting is not just used by the finance department, it is also used in operations and marketing

Question 2

Who are sales budgets firstly produced by and what is their purpose?

Answer 2

Sales budgets are firstly produced by the marketing department.
Their purpose is to:
-provide targets for sales staff to aim for
-be used in conjunction with bonuses or commission for meeting targets
-motivate sales staff to reach targets

Question 3

What are production budgets created by and what is their purpose?

Answer 3

Production budgets are created by using information from the sales budget,
Their purpose is to:
-plan production so that there are enough goods to meet anticipated sales
-allow enough raw materials to be purchased so there is no understocking
-allow for not too many raw materials to be purchased so there is no overstocking

Question 4

What is capital-intensive production?

Answer 4

Capital-intensive production involves producing products primarily by means of machinery and equipment

Question 5

What are the two ways that capital-intensive production can utilise?

Answer 5

• automation

- mechanisation

Question 6

Automation

Answer 6

• automation refers to production being fully automatic

- this involves the use of computer aided manufacturer (CAM) to control fully automated assembly lines that use robotics

Question 7

Advantages and disadvantages of automation

Answer 7

Advantages

• CAM/robotics produce products in exactly the same way every time, improving consistency
• CAM doesn’t lose concentration so fewer mistakes are made, which limits waste
• robots can do jobs that are dangerous for humans to do
• robots don’t take breaks, holidays or sick leave so can work 24/7
• fewer employees are needed as automation doesn’t require human control, reducing wage costs

Disadvantages

• huge investment is needed to automate a production line
• breakdowns can be catastrophic, losing hours of production time and wasting vast amounts of materials
• replacing labour with automated robotics will demotivate retained employees
• absence of a ‘human touch’ often leads to lack of creativity and personality in the products produced

Question 8

What is mechanisation?

Answer 8

Mechanisation refers to labour and machines working together to produce products. A traditional example is a machinist operating a sewing machine in a textile factory

Question 9

Advantages and disadvantages of mechanisation

Answer 9

Advantages

• using machinery improves accuracy over purely handmade products as human error is lessened
• using machinery can speed up production
• unlike automation, a human element exists in mechanisation, improving creativity

Disadvantages

• the machines and equipment can’t be used without humans, so are liable to some human error
• production can’t be 24/7 as humans require breaks, holidays and so on
• if machinery breaks down the business has to repair it, leaving workers idle

Question 10

What is labour intensive production?

Answer 10

Labour intensive production involves humans doing most of the work

Question 11

What are advantages and disadvantages of labour-intensive production?

Answer 11

Advantages

• Labour can be less expensive than capital-intensive production
• humans can use initiative and creativity something that is often lacking an automated systems
• there is constant supply of labour, often skilled labour, available in areas of the country with manufacturing traditions
• employees are motivated as they are not ‘giving up’ tasks to machines

Disadvantages

• The business is at risk of human error, resulting in waste, faulty products and disgruntled customers
• humans have to take breaks, holidays, ect which limits production time
• humans have to be paid overtime for working over normal hours whereas machines cost the same at any time of day
• recruitment, training and wage costs need to be considered

Question 12

What are reasons for production choices ?

Answer 12

• quantity of goods required= if large quantities are required capital intensive production will be more suitable than labour intensive
• skills of the workforce= if the workforce is highly skilled their expertise would be better suited to labour intensive production
• cost of labour= rising labour costs (perhaps due to a rising minimum wage) could mean that the business should move to capital intensive production
• finance available= large amounts of finance are required to equip factories or hire the number of staff needed for large-scale capital intensive production
• Technology available=if the business doesn’t have the technology required for a capital intensive production, labour intensive is the only option

Question 13

What is job production?

Answer 13

• job production is when a product is completed from start to finish by a single worker or a team of workers.
• typically, one job is completed before moving onto another.
• this process is very labour intensive

Question 14

What are advantages and disadvantages of job production?

Answer 14

Advantages

• the items being produced can be personalised to suit each individual customers requirements and often include one-off products
• customers can still make changes to the design during the production process
• workers are highly skilled and it can be highly satisfying for them to work on a product from start to finish
• quality can be carefully checked on a regular basis to ensure it is of a high-enough standard
• managing the production process is much simpler
• due to the degree of skill and time spent, higher prices can be charged

Disadvantages

• labour costs are high as workers are highly specialised and production is time consuming and labour intensive
• specialist tools could be required. This involves expensive equipment which might need replaced more often
• as the products are custom ordered, bulk buying of raw materials cannot take place so the benefit of economies of scale won’t be possible.
• the entire process can take a lot of time, especially if specifications change during the process.
• the finished product is expensive

Question 15

What is batch production?

Answer 15

• this method of production is typically used when a group of similar or identical products has to be produced at the same time.
• once the batch has been produced, another identical batch is produced, and so on.
• all the products in that batch move through the production process together.
• this process could be described as having a mechanised nature.

Question 16

What are advantages and disadvantages of batch production?

Answer 16

Advantages

• because groups of similar products can be made at the same time, they have a standard appearance and quality
• organisations can take advantage of bulk-buying cost saving, and can therefore enjoy economies of scale
• staff members become more expert as time goes on and the level of productivity increases
• there is the possibility to change the specifications of the batches for customers, but the entire batch will be altered, and not just a single unit
• as the same machinery is used for each batch, savings can be made
• highly specialised workers are not required, so savings can be made in wages

Disadvantages

• workers often have to wait in between batches- for example, while machinery is being cleaned and prepared for a new batch. These delays cost the organisations money.
• motivation and job satisfaction are lower due to the repetitiveness of the job. One impact of this can be seen in higher labour turnover
• if a fault is found in a product, then the entire batch must be recalled and either scrapped or recycled where possible
• the machinery required can be expensive
• holding large stocks of raw materials can be expensive to store and insure
• if only small batches are produced, the running costs of making them are high

Question 17

What is flow production?

Answer 17

• flow production is used in mass manufacturing where an item goes from stage to stage on an assembly production line, with parts being added to it at each stage.
• once it has reached the final stage, the product should be fully assembled.
• this process is heavily automated and capital intensive

Question 18

What are advantages and disadvantages of flow production?

Answer 18

Advantages

• this method allows large quantities of products to be produced to à standardised formula.
• machinery can reduce the cost if labour and human error.
• the use of automation allows constant production 24/7
• raw materials can be bought in bulk, so économes of scale can be an advantage
• quality can be checked as the item moves along the assembly line, so the assembly line can be halted and any faults can be rectified as soon as they are identified

Disadvantages

• technology might have to be updated to keep up with the competitors, which can be expensive
• the initial cost of the machinery and any subsequent breakdowns in expensive
• no personalisation is possible in flow production
• job satisfaction is low because employees have routine, low skilled duties.