Flashcards in operational decisions- increasing effiency and productivity Deck (18):
this means using resources effectively. unit costs is a key way of measuring efficiency
define labour productivity
measures the amount of goods produced in relation to the number of employees
what's lean production?
the adoption of operational techniques that reduce waste
what is just in time? (JIT)
a method of minimising the amount of stock held by a business
improving efficiency by making a small but continuous improvements to operational processes
what's labour intensive?
when operations process uses a high proportion of labour in production compared to the amount of capital equipment used
what's capital intensive?
when operations process uses a high proportion of capital equipment in production compared to the amount of labour used
2 ways how you can improve capacity utilisation when capacity is low?
- boost sales by changing aspects of the marketing mix
- reduce capacity permanently (rationalisation/downsizing) if it is a long term problem
2 ways in which a firm could improve capacity utilisation if capacity is high?
- outsource production to other firms to meet demand
- reduce demand by changing elements of the marketing mix
2 ways which increasing labour productivity can improve efficiency
- investing in machinery and equipment including technology
- training workers so they have the skills required to do their job
2 problems of increasing labour productivity
- employees may demand higher pay as reward for their higher output
- output per worker may increase but it may be done in a wasteful manner so overall efficiency may not improve
what are the 3 factors which will affect a business's choice of whether they will be capital or labour intensive?
- the size of the firm- large firms more capital intensive (economies of scale)
- type of product- large quantities (capital) one off specialist products (labour)
- finance available to them- finance available (capital)
what are the 4 components involved in lean production?
- quality (total quality management)
- time based management
- just in time (JIT)
3 characteristics of just in time (JIT)
- customer focus- reacts to consumer demand rather than on pushing product out to the market
- suppliers are part of the system so a partnership approach to suppliers is essential
- significantly reduces all 3 types of stock freeing up storage and production space
3 advantages of JIT systems
- less money tied up in stock so cash flow is better
- close links with suppliers; seen as partners
- less chance of having out of date stock; waste is reduced
3 disadvantages of JIT systems
- vulnerable to supply problems
- loss of custom if deliveries are late
- higher delivery charges
what are the 6 ways in which new technology is used in business
- automation- replacing workers with machines
- robotics- science of using machines in production
- 3D printing/ additive manufacturing
- computer aided design- designers use computer modelling to develop new ideas
- computer aided manufacture- computers to operate machinery
- computer aided process planning- computers to identify the most efficient ways to manufacture products