Resource Management 2.4 Flashcards
(101 cards)
1
Q
What is job production?
A
- Small number of items produced
- Made to customers specification
2
Q
What are the advantages of job production?
A
- Customer changes handled
- Higher quality
- Employees better motivated
- Flexible production
3
Q
What are the disadvantages of job production?
A
- Individual unit costs high
- Labour intensive= higher labour costs
- Requires close consultation with client
- Reliant on high skills
4
Q
What is involved with batch production?
A
- Similar items produced together
- Each batch goes through 1 stage of production process before next stage
5
Q
What are the aims of batch production?
A
- Concentrate skills
- Better use of equipment
- Produce good quality products more economically
6
Q
What are the advantages of batch production?
A
- Cost saving (bulk buy)
- Allow for customer choice
- Products worked on by specialist staff
- Allow firms to handle unexpected orders
7
Q
What are the disadvantages of batch production?
A
- Takes time to switch production from 1 to other
- Require business to maintain higher stock of raw material
- Tasks repetitive (reduce motivation)
- Size of batch dependent on capacity allocated
8
Q
What is flow production?
A
- Making high volumes of same product
- Product moves continuously through production process
- One task finished, next start immediately
9
Q
What are the advantages of flow production?
A
- Cost per unit of production reduced
- Suitable for manufacture of large quantities
- Capital intensive (work constantly)
- Less need for training + skills
10
Q
What are the disadvantages of flow production?
A
- Very long set up time + reliant on high quality machinery
- High raw materials + finished stock
- Goods mass produced
- Production shut down if flow stopped
11
Q
What is cell production?
A
- Work organised into teams
- Teams given responsibility of doing part of production
- Lead to improved productivity
12
Q
Why does cell production lead to improved productivity?
A
- Increased motivation
- Specialisation
13
Q
What are the advantages of cell production?
A
- Group working allows ideas to be generated within cell (improvements to processes)
- Small, highly skilled cells adjust its products to suit customer needs
14
Q
What are the disadvantages of cell production?
A
- Costs relatively high (reliant on people)
- Production volumes not as high as flow production
15
Q
What factors depend on what production should be used?
A
- Target market
- Technology
- Resources
- Quantity required
16
Q
What do we look at to measure productive efficiency in a business?
A
- Productivity
- Unit costs
- Capacity utilisation
17
Q
What is productivity?
A
Measure of the efficiency of the production process
18
Q
What is production measured in?
A
Output per worker per period of time
19
Q
What is the labour productivity formula?
A
Output per period (units)/ number of employees at work
20
Q
What factors are there influencing productivity?
A
- Quality/ age of machinery
- Skills + experience of workers
- Level of employee motivation
21
Q
How does the quality & age of machinery influence productivity?
A
- Modern equipment + better production process= inc. output
- Improve competitiveness + boost econ. growth
- Old machinery likely to break + less accurate
22
Q
How does the skills & experience of workers influence productivity?
A
- Better training (produce more + fewer mistakes)
= Could take training then leave - Swap jobs if more skilled
23
Q
How does the level of employee motivation influence productivity?
A
- Design jobs with motivators to help employees give more
24
Q
What does efficiency measure?
A
Extent to which the resources used in a process generate output without wastage
25
Why are unit costs important?
Indicator of efficiency + productivity of business
Critical to profitability + competitiveness
26
What do unit costs measure?
Average cost per unit produced, as measured over a particular time period
27
How do you calculate unit costs?
Total production costs in period (£)/ total output in period (units)
28
What are economies of scale?
Cost advantage that a business can exploit by expanding their scale of production
29
What is the effect of economies of scale?
Reduce the average unit costs of production
30
What are internal economies of scale?
Arise from growth of the business itself
31
What are the 4 different examples of internal economies of scale?
1. Technical economies of scale
2. Specialisation of workforce
3. Marketing economies of scale
4. Managerial economies of scale
32
What is technical economies of scale?
Large-scale businesses afford to invest in expensive + specialist capital machinery
33
What is specialisation of the workforce?
Larger businesses split complex production processes into separate tasks to boost productivity
- Workforce able to produce more output in same time
34
What is marketing economies of scale?
Large business can spread its advertising & marketing budget over a larger output + purchase inputs in bulk (negotiation to bring down price)
35
What is managerial economies of scale?
Large-scale manufacturers employ specialists to supervise production systems, manage marketing systems + oversee HR
36
What is external economies of scale?
Occurs within an industry
37
What are 3 examples of external economies of scale?
1. Development of research in local uni. benefits multiple business
2. Local authorities improving transport network
3. Relocation of component suppliers close to main centre of manufacturing
38
What are examples of labour intensive operations?
- Food processing
- Hotels & restaurants
- Fruit farming
- Hairdressing
- Coal mining
39
What are examples of capital intensive operations?
- Oil extraction & refining
- Car manufacturing
- Web hosting
- Intensive arable farming
- Transport infrastructure
40
What are the key implications for unit costs of labour intensity?
- Higher costs than capital
- Costs mainly variable (lower BE output)
- Firms benefit access to sources of low-cost labour
41
What are the key implications for unit costs of capital intensity?
- Higher costs than labour
- Costs mainly fixed (higher BE output)
- Firms benefit access to low-cost, long term financing
42
What are the benefits of labour intensity?
1. Unit costs low in low-wage areas
2. Flexible resource (multi-skilling/ training)
3. At heart of production process
43
What are the drawbacks of labour intensity?
1. Risk of problems with employee/employer relationship
2. High cost of labour turnover
3. Continuous investment in training
44
What are the benefits of capital intensity?
1. Greater op. for EoS
2. Better productivity
3.Better quality & speed
4. Lower labour costs
45
What are the drawbacks of capital intensity?
1. Significant investment
2. Loss competitiveness due to obsolescence
3. Generate resistance to change from labour force
46
What is capacity utilisation?
Proportion of maximum capacity being used by a business
47
What is the capacity utilisation calculation?
Current actual output/ maximum potential output
x 100
48
What are the negative implications of under-utilised capacity?
- Higher unit costs
- Demotivation (employee bored)
- High employee turnover
- Missed growth op
49
What are the implications of over-utilised capacity?
- Poor quality (burn out)
- Machinery wear out quicker
50
What are 2 ways of improving capacity utilisation?
1. Increase current output
2. Reduce maximum capacity
51
How does increasing current output improve capacity utilisation?
- Use marketing methods to boost volume of sales made by business
- Use capacity to make products for other businesses
52
How can reducing maximum capacity improve capacity utilisation?
- Selling off assets/ laying off staff
- Costly ST, but reduces FC
53
What are some reasons for below capacity?
1. Lower than expected demand
2. Loss of market share
3. Seasonal variation
4. Recent increase in capacity
5. Maintenance + repair programme
54
What are the costs needed for capacity?
- Equipment (production line)
- Facilities (rent/ insurance)
- Labour (wages/ salaries)
55
What is the average costs calculation?
Total costs/ output
56
What is stock?
Raw materials, work-in-progress and finished goods held by a firm to enable production + meet customer demand
57
What are the 3 main categories of stock?
1. Raw material & components
2. Work in progress
3. Finished goods
58
What is raw materials & components stock?
- Bought from suppliers
- Used in production process
59
What is work in progress stock?
Semi/ part finished production
60
What is finished goods stock?
Completed products ready for dale/ distribution
61
What are 6 reasons why businesses will hold stock?
1. Enable production to take place
2. Satisfy customer demand
3. Precaution against delays from suppliers
4. Allow efficient production
5. Allow for seasonal changes
6. Provide buffer between production processes
62
Why is stock management and control important?
Stock outs or having the wrong stock can lead to significant damage to the business
63
What are the 3 main influences on the quantity of stock held?
1. Need to satisfy demand
2. Need to manage working capital
3. Risk of stock losing value
64
What 4 costs need to be accounted for when holding stock?
1. Cost of storage
2. Interest costs
3. Obsolescence risk
4. Stock out costs
65
What is the cost of storage?
More stock requires large storage space + extra employees/ equipment to control/ handle them
66
What are interest costs for stock?
Holding stock means typing up capital on which the business may be paying interest
67
What is obsolescence risk?
Longer stock held, greater the risk that they will become obsolete (unusable)
68
What are stock out costs?
Happens if business runs out of stock
- Lost sales & customer goodwill
- Cost of production stoppages/ delays
- Extra costs of urgent, replacement orders
69
What is the maximum level on a stock control chart?
Max level of stock a business can/ wants to hold
70
What is the re-order level on a stock control chart?
Know that when stock falls to this level, the next supplier order should be placed
71
What is the lead time on a stock control chart?
Amount of time between placing the order + receiving the stock
72
What is the minimum stock level on a stock control chart?
Minimum amount of product the business would want to hold in stock
73
What is buffer stock on a stock control chart?
Amount of stock held as a contingency in case of unexpected orders, so orders can be met
74
On a stock control diagram, what do the vertical gaps mean?
Quantity of stock
75
On a stock control diagram, what do the horizontal distances mean?
Times
76
What considerations are required in deciding when and how much stock should be re-ordered?
1. Lead-time from suppliers
2. Implications of running out (stock-outs)
3. Demand for the product
77
What are the benefits of holding low stock levels?
1. Lower stock holding costs
2. Lower risk of stock obsolescence
3. Less capital tied up in working capital
4. Consistent with operating 'lean'
78
What are the benefits of holding high stock levels?
1. Production fully supplied
2. Potential for low unit costs if ordering in bulk
3. Better able to handle unexpected changed in demand
4. Less likelihood of 'stock-out'
79
What is lean production?
An approach to management that focuses on cutting waste, whilst ensuring quality
80
What does lean production aim to do?
Cut costs by making the business more efficient + responsive to market needs
81
What is just-in-time stock management?
Aims to eliminate buffer stock completely
82
What does just-in-time stock management rely on?
Frequent, small delivers of materials from suppliers being delivered without delay + without quality problems
83
What are key issues to consider for a firm using just-in-time stock management?
1. Suppliers willing to deliver frequently
2. Deliveries 100% reliable as missed deliveries= firm without stock
3. Suppliers may need to relocate closer to firm
4. Lead to loss of bulk buying discount?
5. Frequent deliveries lead to congestion + pollution from lorries?
84
What is the continuous improvement process (Kaizen)?
Identify-> organise-> execute-> improve
- Constantly trying to improve something
85
In what ways can lean production improve how a business runs?
1. More input from staff
2. Focus on quality
3. Fewer wasted resources through just-in-time + quality management
4. Focus on reducing wasted time, speed can become competitive advantage
86
What can improving how a business runs lead to?
1. Higher levels of productivity (reduce labour costs per unit)
2. Less space + stock (reduce FC)
3. Higher quality (reputational adv. + greater repeat custom)
4. Faster developing new products (1st to market with new ideas)
87
What does quality mean?
The ability of a product/ service to meet customers' expectations
88
What customer interpretation of quality be influenced by?
1. Price
2. Brand
3. Customer's personal expectation/ experience
4. Nature of product/ service
89
What are some ways the quality of goods can be measured by?
- Aesthetics
- Physical attributes
- Functionality
- Support products with it
- Reliability
- Warranty
- Reputation
90
What are some ways the quality of services can be measured by?
- Customer service
- Cleanliness
- Efficiency
- Speed of staff
- Staff knowledge
- Appearance of env.
- Friendliness of staff
91
What are the benefits of good quality?
1. Less waste (lower cost)
2. Loyal customers
3. Improved competitiveness
4. Lower marketing cost
5. Price inelastic (pay higher prices)
6. Higher levels of profit
92
What are the consequences of bad quality?
1. Costs to repair/ replace items (recalls)
2. Give discounts to sell items
3. Customers move to competitors
93
How can good/bad quality be measured?
1. Customer service ratings
2. Product returns
3. Warranty claims
4. Rejected output from production
5. Levels of repeat business
6. Market survey
7. Profit margin
94
What are some methods of improving quality?
1. Train employees
2. Motivate employees
3. Technology
4. Work with suppliers
5. Understand customer expectation
6. Quality systems
95
What is quality control?
Checking of a good/ service before it is delivered to a customer
96
What are the advantages of quality control?
1. Ensure best quality
2. Avoid returns on products
3. Doesn't require much staff training
4. Inspector takes responsibility
5. Stop faulty products reaching customer
97
What are the disadvantages of quality control?
1. Wasted product if checked at end
2. Could missed faulty sample if only sample certain ones in batch
3. Dependent on humans (reliable?)
4. Responsibilities away from operatives
98
What is quality assurance?
Checking of product/ service at each stage of its production
99
Why is quality assurance reliant on self-checking?
Each operative checks their stage of process/ component before passing it along
100
What are the advantages of quality assurance?
1. Less waste
2. Motivate employees
3. Aim to achieve objective of 0 defects
4. Enhance business reputation
5. Clear systems in place
101
What are the disadvantages of quality assurance?
1. Trust in employees
2. Require staff training + high levels of staff commitment
3. Slow down production process + labour productivity
4. Demotivated employees feel under pressure
5. Op. costs of managers time implementing controls
