Unit 4.1 Production of Goods & Services Flashcards
(31 cards)
Production
Process converting factors of input (factors of production) into final goods and services (output)
Productivity
Total Output/Total Input
3 Factors affecting Labour Productivity
- Education/Training and Skills
- Salaries/Wages
- Working Environment
4 Factors affecting Capital Productivity
- Technological Process
- Maintenance of Machine
- Skills of workforce
- Age of the machine
Efficiency
Measures how a business uses its resources to maximise output by reduce cost and waste
3 ways to increase Efficiency
- Set realistic goals and targets for employees
- Increased automation
- Train workers to be skilled
Lean Production
Focuses on cutting out waste whilst ensuring quality
How to achieve Lean Production
- Doing the simple things well
- Making continuous improvement (KAIZEN)
- Avoiding waste
- Involving employees in the continuous process of improvement
Just In Time inventory
When materials are purchased and units are produced only as needed to meet actual customer demand
3 types of Production
- Job Production
- Batch Production
- Flow Production
Job Production
- items are made individually
- each item is finished before starting a new one
- product is made specifically
2 Job Production Advantages
- Meets requirement of customer so increases customer satisfaction
- Workers get varied jobs increasing motivation and job satisfaction
2 Job Production Disadvantages
- Skilled labour is costly
- Total cost is high
Batch Production
When groups of items are made together
- Each batch is finished before starting the next new batch
3 Batch Production Advantages
- Cheaper to produce a whole batch compared to job production
- Machinery can be used more efficiently, saving money
- Reduces risk of concentrating on one product, allowing for flexibility
3 Batch production Disadvantages
- Equipment used in batch production must be reset between batches to ensure correct production, which is time consuming
- Needs warehouse space leading to increased storage cost for large quantities of products produced
- Not personalised
Flow Production
-When identical, standardised items are produced on an assembly line
- Uses a lot of automation
Flow Production Advantages
- Low average costs leading to low prices
- Individuals become better at the job
- No to little skilled labour needed therefore little training required
Flow Production Disadvantages
- Little job satisfaction because it’s monotonous
- If one machine breaks down, the whole production line will have to be halted
- Not flexible
Impact of Technology on Production
- Produces higher quantities
- Makes products more consistent/equal
- More cost effective (Long run)
Considering costs
- Technology costs money but reduces the cost of producing products
- e.g. risky jobs are paid high wages so machinery reduces cost and improves employee health
Considering Productivity
- Using machinery parts in the production process increases productivity
- Business can reduce its price to stay competitive or increase profit margin
Considering Quality
- It is more consistent in the quality of the products
Considering Flexibility
- Automation is good for mass production but not good for personalised products to meet customer preferences
- Need to balance human workers with machine to do more personalised parts
