Operations Resource Mix

• What are the two types of operations processes?

  • Labour intensive
  • Captial intensive
• What are labour intensive processes?

  Processes that require a high amount of manual labour
• When using labour intensive processes, are labour costs or capital costs higher?

  Labour costs
• When using labour intensive processes, costs are mainly what?

  Variable
• In labour intensive businesses costs are mainly variable
• Labour supply (quantity and quality) is a key issue with labour intensive businesses
• What is a key issue with labour intensive processes?

  The quality and quantity of labour available
• What are examples of businesses with labour intensive processes?

  • Hotels and restaurants
  • Fruit farming/picking
  • Hairdressing and other personal services
• What are capital intensive processes?

  Processes that require a large amount of capital investment.
• In capital intensive processes, are capital costs or labour costs higher?

  Capital costs
• When using capital intensive processes, costs are mainly what?

  Fixed
• In capital intensive processes, costs are mainly fixed (including depreciation)
• With capital intensive processes, significant investment is often required (e.g. automation) but with longer term benefits on unit costs
• What are examples of businesses that use capital intensive processes?

  • Oil extraction and refining
  • Car manufacturing
• How can a business become more capital intensive?

  • Raising finance - funds needed to invest in new machinery
  • Change of equipment or ways of producing goods
  • Innovation - improving productivity through new equipment
• What are factors influencing the resource mix?

  • Relative price of the resources
  • Availability of resources
  • State of technology
  • Nature of the product or process - e.g. ford cars are mass produced so are capital intensive