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Methods of Production Intermediate II and Higher Business Management.
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Transcript of Methods of Production Intermediate II and Higher Business Management.
Methods of Production
Intermediate II and Higher Business Management
Production Methods
Copyright: Photolibrary Group
Whilst all output can be classed as production, different production methods may be more appropriate for different products or services.
Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare
Production Methods
Copyright: iStock.com
As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive
Production Methods
California Oil is Source of Wealth and FearCopyright: iStock.com
Bottle production lineCopyright: Photolibrary Group
The choice of production method and the factor inputs depends on such things as:
• the nature of the product
• factor costs
• the scale of production
Production Decisions
Which method? Type of Product
One-Off Order?
Mass Market product?
Batch?
Market size and Segment
Factor Costs – Land, Labour and
Capital
Complexity of design
Methods of Production• Job Production
• Batch Production
• Flow Production
MASS PRODUCTION IN LARGE FACTORY
Production Methods• Job Production – One-off production -
each item might have particular specifications
• Flow Production – suitable for mass market products that are identical
• Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same
Job Production
• A house built to your own design
• A custom-built boat
• A piece of artwork
• A hand-turned wooden bowl
Job Production
• Advantages:-– Customers demands
can be exactly met.– A high price may be
charged.– Specifications can
be changed even if production has started.
– Workers motivated as variety of skills required.
• Disadvantages:-– Expensive due to
skills required.– High R&D, transport
and admin costs.– Variety of
equipment and tools required.
– Lengthy lead times.
Batch Production
• A number of similar products (repeated jobs)
• The same house repeated on a building site
• Bakery produce - each batch may differ slightly
Batch Production
• Advantages– Batches can be
changed to meet specific customer requirements.
– Reduced need for highly skilled staff.
– Machinery can be relatively standardised.
• Disadvantages– Machines/workers may sit
idle between stages.– Expensive machinery may
be required due to less skilled staff.
– Stock levels may be high.– Staff may be less
motivated due to repeating the same task in batches.
– If batches are small, costs will be high.
Flow Production
• Mass production of almost identical products
• Cars
• Washing machines
Flow Production
• Advantages– Costs spread over a
large number of goods.– Bulk discounts– Huge quantities can be
produced.– Automation often used
which reduces chance of human error.
– Machinery can work 24/7
• Disadvantages– Huge set up costs.– Individual customer
requirements cannot be met.
– Equipment may be inflexible.
– Worker motivation can be low because of the repetitive nature of the job.
– Breakdowns can be very costly.