Production

Question 0

Describe job production, giving examples.

Answer 0

Making one thing at a time. Used for individual, unique products. When work on one product is finished, production of another can begin.
E.g. Ships, bridges, wedding cakes, made-to-measure clothes.

Question 1

List the three types of production.

Answer 1

Job production
Batch production
Flow production

Question 2

Describe flow/mass production, giving examples.

Answer 2

Producing as many as possible of an identical product. Used for mass market products, so can be expensive for smaller businesses. Usually highly automated. Production is continuous without stoppages (shift work).
E.g. Fizzy drinks, mobile phones, televisions.

Question 3

Describe batch production, giving examples.

Answer 3

A combination of job and flow production. Make a limited number of one identical product then stop, reorganise and make a batch of something else.
E.g. Bread, milk, different-sized clothing.

Question 4

What are the advantages/disadvantages of job production?

Answer 4

Ads: Increased selling price due to ‘handmade’ impression; high quality product; specifically designed product.
Disads: Time-consuming, slow process; small output; costly materials.

Question 5

What are the advantages/disadvantages of batch production?

Answer 5

Ads: Can vary production depending on demand; variety of products.
Disads: Not all products will sell resulting in leftover stock; costs a lot to have variety; quite tedious where it is easier to just produce large numbers of what is needed.

Question 6

What are the advantages/disadvantages of mass/flow production?

Answer 6

Ads: Quick and cheap, obtain economies of scale.
Disads: No variety; requires detailed quality checking; low prices for identical products; lack of jobs as many processes would be highly automated.

Question 7

What is quality control?

Answer 7

The traditional way of managing quality. It involves inspecting products during production, testing products and sampling them as they are produced. It is about detection rather than prevention, but is a very expensive process.

Question 8

What is quality assurance?

Answer 8

This involves minimising the chances that the product/service will be sub-standard. The focus is on product design so that quality can be ‘built in’, and there is less of a need to inspect. Successful quality assurance results in zero defect production.

Question 9

What is specialisation?

Answer 9

When workers do only one particular kind of work. It can occur in all types of production and only applies to skilled workers.

Question 10

What are economies of scale?

Answer 10

The cost advantage from business expansion. They arise when the cost per unit falls as the output increases.

Question 11

What is an average cost?

Answer 11

How much it costs on average (including fixed costs) to make one product.

Question 12

What are fixed costs?

Answer 12

Costs that do not change however many items you sell.

Question 13

What are the types of economies of scale?

Answer 13

Purchasing economies, managerial economies, financial economies, technical economies, risk-bearing economies and marketing economies.

Question 14

What is total quality management (TQM)?

Answer 14

An ‘attitude’ adopted by the whole business where everyone in the workforce is concerned with quality at every stage of the production process. Quality is checked by workers and not inspectors.

Question 15

What are the three types of stock?

Answer 15

Raw materials
Work-in progresses
Finished goods

Question 16

Why would a firm hold stock?

Answer 16

Firms may need to be able to cover orders quickly.
Stock represents an investment made by the firm.
Money (working capital) is tied up in stock- not liquid.
Payment for finished goods can be tied up for months.
May buy stock to gain economies of scale.

Question 17

What are the implications of running out of stock?

Answer 17

Lost production.
Lost contribution from lost sales.
Loss of customer good will and future sales.

Question 18

What is the meaning of ‘kaizen’?

Answer 18

It is a Japanese word meaning ‘continuous improvements.

It involves getting staff to talk about what could be improved in their production and passing it on.

Question 19

Describe Just In Time production (modern stock control).

Answer 19

JIT Production minimises the stock held. To do this, a firm needs to have good suppliers who can deliver reliably. This is an example of LEAN production.

Question 20

What is lean production?

Answer 20

A set of measures that aim to reduce waste during production. Waste reduction methods, such as JIT ordering of stock, will increase efficiency.

Question 21

What is productivity?

Answer 21

A measure of how much each employee makes over a period of time. It is calculated by dividing the total output by the number of workers.

Question 22

In what ways can a firm cut costs?

Answer 22

Reducing overheads such as administration, e.g. making some support staff redundant (customer service may suffer however).
Relocation to counties where staff with appropriate skills can be hired at lower wages.
Improving management so staff are motivated to work harder, or are better used.
Redesigning the product so an item is easy and cheaper to make.

Question 23

What are the advantages of specialisation?

Answer 23

Helps a business to increase productivity as workers can complete tasks more efficiently. Also improves quality as skilled workers are likely to do a job better than workers who are unsure of how to do the job at all.

Question 24

What are the disadvantages of specialisation?

Answer 24

Workers need training to become skilled in an area.

Workers can become bored as they must do the same job all the time.

Question 25

What is efficiency?

Answer 25

Efficiency is about making the best possible use of resources. Efficient firms maximise outputs from given inputs, and so minimise their costs. By improving efficiency a business can reduce its costs and improve its competitiveness.

Question 26

What is production?

Answer 26

The total amount made by a business in a given time period.

Question 27

If a firm increases productivity without increasing costs, what else do they increase?

Answer 27

Efficiency

Question 28

What does staff productivity depend on?

Answer 28

Skills
Quality of machines available
Effective management

Question 29

How can a firm increase productivity?

Answer 29

Training
Better management
Investment in equipment.
(Training and investment cost money in the short term, but can raise long-term productivity)

Question 30

What are diseconomies of scale?

Answer 30

When a business becomes so large that it’s unit costs begin to rise.

Question 31

What are diseconomies of scale caused by?

Answer 31

Ineffective communication: coordinating large numbers of staff becomes a challenge. Big businesses can develop many levels of hierarchy which slow down communication or even lead to miscommunication.
Reduced motivation: staff can feel remote and unappreciated in a large organisation. When staff productivity begins to fall, unit costs begin to rise.

Question 32

What is customer service?

Answer 32

The experience a customer gets when using products made by the business. Satisfied customers make repeat purchases and recommend the product to friends, leading to additional word-of-mouth sales.

Question 33

How can a business ensure that their quality standards are met?

Answer 33

Training so that staff understand their role and responsibilities.
Innovation or introducing new ideas and methods.
Listening to customers helps a business adjust its products to better match consumer needs and respond to any problems.

Question 34

What is Just In Case stock control?

Answer 34

This is when a business have a maximum and a minimum stock level. When stock levels fall to a certain level, orders are made but with buffer stock held in case deliveries are held up or there is an unexpected large order. Lead time is the time is takes for ordered stock to arrive.

Question 35

What is computer-aided manufacturing (CAM)?

Answer 35

This reduces labour costs, is more accurate and faster and can work at any hour of the day. The computer controls the machinery.

Question 36

What is computer-integrated manufacturing (CIM)?

Answer 36

Here, computers control the whole production line. Best example is in car production where robots undertake much of the work, reducing the need for labour to perform boring, routine tasks.

Question 37

What is computer-aided design (CAD)?

Answer 37

Computers are used to help design products using computer generated models and 3D drawings. Reduces the need to build physical models to test certain conditions, known as prototypes. This can be expensive to produce just for testing purposes (e.g. aircraft or new cars).

Question 38

How can new production technology (CAM, CIM, CAD) help a business?

Answer 38

Increase the speed of production
Improve the quality of the product
Reduce costs per unit of production.

Question 39

What are the advantages of JustInTime stock control?

Answer 39

Lower stock holding means a reduction in storage space which saves rent and insurance costs
As stock is only obtained when it is needed, less working capital is tied up in stock
There is less likelihood of stock perishing, becoming obsolete or out of date
Avoids the build-up of unsold finished product that can occur with sudden changes in demand
Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time

Question 40

What are the disadvantages of JustInTime stock control?

Answer 40

There is little room for mistakes as minimal stock is kept for re-working faulty product
Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed
There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders – however, JIT is a very responsive method of production