Theme 2-2.4

• Productivity- output per input (person or machine)in an hour
• Production- total amount of output that is produced in a time period
• methods of production: Job production - a single product made at a single time which is made for specific customer/client, products made at high quality, higher price. production process can be slow and labour intensive
• job production - advantages:

  • high quality, can charge premium prices
  • staff more motivated to finish the product

  disadvantage:

  • labour intensive, cause demotivation
  • difficult to speed up production if demand increases
• methods of production - Batch production:

  • used to make more than 1 item at a time
  • made in batches, can be switched over to make something else
• batch production : Advantages:

  • can adapt to market
  • less labour as more technology used

  disadvantages:

  • could be wasteful if problem with batch
  • higher average cost per unit
  • repetitive work can be demotivating for workers
• methods of production: Flow production -

  • production lines with continuous movements of items through process
  • used for mass produced products
  • factory laid out in assembly
  • used for standard products
• flow production - advantages:

  • cheaper cost, don’t have to pay as many workers
  • can use JIT

  disadvantages:

  • machinery could break, preventing production
• JIT-(Just in time)

  • materials are delivered as and when needed
• JIT - advantages:

  • no money is tied up inventory
  • reduce wastage

  negative

  • delay in receiving order can stop the production line
  • difficult to cope with changes to demand leading to a loss of sales
• method of production - Cell production:

  • dividing up production into separate self contained areas that specialise in certain areas
  • each cell has a team leader and team of multi-skilled people
• cell production - advantages:

  • wastage through movement of material is reduced
  • time waiting for stock to arrive is reduced
  • bottleneck in production process is reduced

  negatives:

  • any breakdown in machinery can stop production
  • needs more staff to supervise continuous production
  • expanding can be difficult as there is limited space
• Productivity

  • how a business can measure how hard a person or machinery is working
  • efficiency or inefficiency in productivity
• Productivity Bonus

  • increase productivity by offering a bonus
  • it can increases cost which may prevent maximisation of efficiency
• Production Deal

  • union in a business may negotiate a productivity deal for all staff
  • should motivate staff to work more efficiently
  • financial method of motivation and as such there is a cost
• Staffing Training

  • if staff are effectively trained ,they can be more productive
  • once full trained, be able to work harder
  • training is expensive as there is two people doing a job
• Investment in new machinery and equipment

  • investing in equipment can increase the amount of goods produced
  • can be expensive as it would take a while to recoup the money lost when buying the ,machinery
• Factors influencing productivity:

  • quality of inputs can affect the assembly line
  • having enough staff at peek times will increase productivity- stretched staff are demotivated by the overload of work
  • investment in new technology-machinery can work 24/7 ,levels of productivity would increase
• Efficiency


  Production at minimum average cost
• Production aims


  • Operate on minimum average cost to take advantage of economies of scale
• Productivity and efficiency


  Higher output per employees are more efficient
• Competitive advantage


  • Prices per item are lower than competition, market leader through low prices, high profit due to lower production cost
• productivity and effienceicy:

  quality may suffer as products are being produced too quickly
• Labour costs and the impact on production choices

  The higher the wages the higher the production costs are
• labour cost:

  higher production cost may result in using flow production as it is cheaper
• Labour intensive production


  A lot of workers doing a lot of hours
• Capacity


  Maximum possible output
• Capacity utilisation


  • Measure of the extent to which an organisation is using its available resources
  • Expressed as a percentage
  • Operation manager would make daily decisions on capacity utilisation
  • Has a bearing on average cost
• Ways of improving capacity utilisation


  1. Deals/discounts

  2. Moving into smaller premises

  3. Make staff redundant/selling assets
• Deals/discounts


  Increase demand by price cuts, increase sales in off peak times by promoting special deals
• Moving into smaller premises


  Reduce working space would reduce costs
• Make staff redundant/selling assets


  Sell assets to produce added income, reduce staff
• Formula for capacity utilisation


  Current output/maximum output x100
• Running at 80% capacity


  • Usually not possible to work at 100%
  • Can complete rush orders
  • Builds customer relations
• Under-utilisation


  • Higher fixed cost per unit
  • Unmotivated staff
  • Impact brand image
• Over-utilisation


  • Damage reputation
  • Production can be strained
  • Staff may do overtime
• Stock control


  Control of flow of stock in a business
• Interpretation of stock control diagrams

  • Helps with re-ordering
  • Reduce wasted stock
• Maximum stock level


  The most amount of stock that can be stored
• Minimum stock level


  The least amount of stock to have at anytime