Ways of matching production with demand


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	Causes Overtime Temporary staff Part-time staff Sub-contracting Managing stocks efficiently Rationalisation	Effects Staff will be paid a higher hourly rate and this will increase unit costs. Workers may slow down production to ensure that overtime is worked Temporary staff will still need to be recruited and trained and this may be expensive. These workers may lack the loyalty and commitment of permanent staff If these workers have other jobs too, they may not have the loyalty or commitment of full time staff This may be more expensive than producing the goods or services 'in-houses' as the sub-contractor will add on a profit margin to the cost of the work. Quality assurance becomes more difficult as the sub-contractor will have to agree to meet the same quality standards as the contracting business Stock holding is expensive and carries an opportunity cost. Goods can become out of date or may be perishable. Services cannot be stored- they must be produced when the customer is present, waiting lists and customer queues are a form of 'buffer' for providing services. If staff are made redundant then this may reduce job security and motivation of staff remaining. If capacity is cut permanently then if demand increases in the future capacity shortages will again occur. Cutting costs may mean redesigning people's jobs and this can cause uncertainity amongst the staff.
	Overall summary

Staff will be paid a higher hourly rate and this will increase unit costs. Workers may slow down production to ensure that overtime is worked
Temporary staff will still need to be recruited and trained and this may be expensive. These workers may lack the loyalty and commitment of permanent staff
If these workers have other jobs too, they may not have the loyalty or commitment of full time staff
This may be more expensive than producing the goods or services 'in-houses' as the sub-contractor will add on a profit margin to the cost of the work. Quality assurance becomes more difficult as the sub-contractor will have to agree to meet the same quality standards as the contracting business
Stock holding is expensive and carries an opportunity cost. Goods can become out of date or may be perishable. Services cannot be stored- they must be produced when the customer is present, waiting lists and customer queues are a form of 'buffer' for providing services.
If staff are made redundant then this may reduce job security and motivation of staff remaining. If capacity is cut permanently then if demand increases in the future capacity shortages will again occur. Cutting costs may mean redesigning people's jobs and this can cause uncertainity amongst the staff.

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