Operations - Labour Intensive vs Capital Intensive

Question 1

Describe 4 factors to consider when choosing a method of production

Answer 1

1. Demand for product
2. Actual product being made - can it be made by hand
3. Cost of techology/machinery
4. Avaliability of skills and labour

Question 2

Describe each type of production
* Labour
* Capital

Answer 2

• Labour intensive - products are made by human workers
• Capital Intensive - products are made by robots and machines

Question 3

Give 2 advantages and disadvantages of Labour intensive production

THINK ABOUT WORKERS

Answer 3

ADVANTAGES
* Customised products are easier to make
* Less expensive machinery costs → saves money
* Products are handmade → higher price can be charged

DISADVANTAGES
* Quality of products can vary due to expertise of the worker → inconsistency can lead to bad reputation for the business
* Workers need to be trained → time consuming
* Skilled workers will be paid more than unskilled workers → increases wages

Question 4

Give 2 advantages and disadvantages of Capital intensive production

Answer 4

ADVANTAGES
* Machines do not need breaks or holidays → efficient
* Fewer mistakes → less wastage
* No/less workers to pay → saves wage costs

DISADVANTAGES
* Huge initial investment → expensive
* Demotivating for existing employees → higher staff turnover
* Lack of personalisation → premium price cannot be charged