topic 4

• factors of production (land, labour, capital, enterprise) are use to produce goods and services that will satisfy demands identified by the market research department
• Production is the process of taking resources (inputs) and changing

  them (adding value) into products (outputs) to make a profit
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• The level of production = the number of units produced during a time period
• Productivity = the ratio of outputs to inputs during production,
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• average labour costs= annual pay/labour productivity
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• benefits of increasing productivity

  •Less input needed for the same level of output thus reducing cost of production and increased profits.

  •Lower cost/unit.

  •Fewer workers may be needed leading to lower wage costs.

  •Higher wages might be paid to fewer workers thus leading to increased motivation.
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• sustainability


  business operations are maintained in long term by protecting the environment without damaging the quality of life for future generations
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• when change type, Think in terms of

  Capital costs.

  Revenue Costs.

  Quality – Steady vs Variable.

  Price to customers. Higher or lower

  motivation of workers

  training costs
• inventory


  Stocks, materials and goods held by a business required to allow for production of products and their supply to the customers.
• inventory managment


  the process of ordering, storing and using a company’s inventory.
• inventory forms


  raw materals

  work-in progress

  finished product
• factor affecting level of inventory held

  the expected number of daily customers;

  the shelf life of product

  size of storage facilities

  lead time of delivery;

  discounts available for buying in bulk; cost of delivery

  the nature of the product
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• just in case


  This is an inventory management system which aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels.
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• just in time


  this is an inventory management system which aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order.
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