production, productivity and efficiency


  • Created by: Hetal M
  • Created on: 22-04-17 19:44
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  • production, productivity and efficiency
    • production methods
      • job production
        • one off production/job
          • architects, plumbers, builders
          • change in customer requirements can be handled
          • higher quality work
          • flexible production method
          • high labour cost
          • needs close consultation with consumer
      • flow production
        • products continuously flow through the production line
          • less need for training and skills
          • suitable for manufacture of large quantities
          • goods are mass produced - less differentiation for consumers
          • production is shut down if flow is stopped.
      • cell production
        • groups given responsibilities of doing a part of the production process as product is moved along the line
          • increased motivation
          • specialisation
      • batch production
        • a set number of identical products are made
          • firm handle on unexpected orders
          • worked by specialist staff or equipment
          • time consuming when changing one batch to another
          • need to maintain higher stocks of raw materials
    • how to measure productivity efficiency
      • productivity
        • output per worker (per hour, day, week)
      • unit costs
        • total production costs in period / total output in period
        • unit cost = average cost per unit produced
      • non-productive resources
        • too many idle resources = inefficiency
    • scale of economies
      • bring down unit costs of production and sold at lower prices
      • reduce the average cost per unit to be effective.
      • internal economies of scale
        • technical economies
          • large scale, afford to invest in machinery
        • specialisation of the workforce
          • large businesses split the workforce into groups to boost production
        • marketing economies
          • large businesses can spread marketing and advertising budget over a large output, bulk buy things
          • has negotiation power in the market
      • external economies of scale
        • happen within the industry
        • development of research and facilities
        • spending to improve the local community
    • labour intensive
      • high costs related to employment
        • food processing, hotels, restaurants, hairdressing
        • variable costs = lower breakeven point
        • lower costs than capital
        • risk of employee problems
        • need continuous training
    • capital intensive
      • high costs related to machinery
        • oil extraction, transport infrastructure, car manufacture
        • mainly fixed costs = high breakeven point
        • resistance from changing workforce to machinery
        • better productivity
        • low labour costs

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