Production of goods and services - Copy.pptx

chapter4

1. Activity 17.1 a) See table below: output per worker increased to start with but then remained steady. b) Increase the productivity of Better Bakers by introducing new technology; improve worker motivation; train staff. c) Benson cannot measure the output of his office workers if it is not a physical output or measurable in some way.

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3. Inventory control Inventory refers to the amount of stock/goods or materials that are kept by a business for future production, sale or use in the business.

4. Lead time- is the time between placing an order with the supplier, and the inventory becoming available for use. Re-order level. This is the inventory level at which an order should be placed to replenish inventories. The re-order level is determined by considering the maximum rate of consumption and the maximum lead time . Maximum level of stock- the highest inventory level available for use. This level is also a warning to you that inventories are reaching a potentially wasteful level.

5. Why should you hold inventory? To ensure sufficient goods are available to meet expected demand As a deliberate investment policy, especially in times of inflation or possible shortages As a necessary part of the process for example when maturing cheese To allow production processes to flow smoothly and efficiently. To absorb seasonal fluctuations and any variations in usage and demand To take advantage of bulk purchasing discount To meet any future shortages

6. The seven types of wastage that can occur in a firm: Overproduction – producing goods before they have been ordered by customers. This results in too much output and so high inventory costs Waiting – when goods are not moving or being processed in any way, then waste is occurring, Transportation -moving goods around unnecessarily causes waste. They also risk damage during movement Unnecessary inventory -too much inventory takes up valuable space and incurs cost Motion -unnecessary movement about by employees and operation of machinery is a waste of time and cost respectively. Over-processing -using complex machinery and equipment to perform simple tasks may be unnecessary and is a waste of time, effort and money Defects – any fault in equipment can halt production and waste valuable time. Goods can also turn out to be faulty and need to be fixed- taking up more money and time.  

7. Activity 17.2 Student’s own answer but answers should give examples for each of the following: overproduction, waiting, transportation, unnecessary inventory, motion, over-processing, defects. Activity 17.3 Changes identified should include: reduced space needed for production; work-in-progress is reduced; less inventory of raw materials; finished product not stored; more of a flow through the factory; some machines are grouped together.

8. Method of lean production Advantages Kaizen production : it’s a Japanese term meaning ‘continuous improvement’. It aims to increase efficiency and reduce wastage by getting workers to get together in small groups and discuss problems and suggest solutions. Reduced amount of space needed for the production process. Work-in-progress is reduced. Improved layout of the factory floor may combine jobs of some employees, freeing others to do other things. Just-in-Time inventory control : This technique eliminates the need to hold any kind of inventory by ensuring that supplies arrive just in time they are needed for production. Eliminating the need to hold stocks. Goods are delivered to the selling point just when they are needed Cell production: Production line is divided into cells. Each cell makes an identifiable part of the finished product. Improves worker morale

9. Method of production Advantages Disadvantages Job Production: products are made specifically to order, customized for each customer. Eg : wedding cakes, made-to-measure suits, films etc. Most suitable for one-off products and personal services The product meets the exact requirement of the customer Workers will have more varied jobs as each order is different, improving morale Very flexible method of production  Skilled labour will often be required which is expensive . Costs are higher for job production firms because they are usually labour-intensive . Production often takes a long time . Since they are made to order, any errors may be expensive to fix. Materials may have to be specially purchased for different orders, which is expensive

10. Method of production Advantages Disadvantages Batch Production : similar products are made in batches or blocks. A small quantity of one product is made, then a small quantity of another. Eg : cookies, building houses of the same design etc. Flexible way of working- production can be easily switched between products Gives some variety to workers More variety means more consumer choice Even if one product’s machinary breaks down, other products can still be made Can be expensive since finished and semi-finished goods will need moving about. Machines have to be reset between production batches which delays production Lots of raw materials will be needed for different product batches, which can be expensive.

11. Method of production Advantages Disadvantages Flow Production: large quantities of products are produced in a continuous process on the production line. Eg : a soft drinks factory. There is a high output of standardized (identical) products Costs are low in the long run and so prices can be kept low Can benefit form economies of scale in purchasing Automated production lines can run 24×7 Goods are produced quickly and cheaply Capital-intensive production, so reduced labour costs and increases efficiency A very boring system for the workers, leads to low job satisfaction and motivation Lots of raw materials and finished goods need to be held in inventory- this is expensive Capital cost of setting up the flow line is very high If one machinery breaks down, entire production will be affected

12. Activity 17.4 a) Job production then batch production when she first rents a factory. Finally she uses flow production when moving to the larger factory. b) Increased demand means more output needs to be produced. Also Tara wanted increased efficiency and lower costs per unit. Activity 17.5 a) Walls: flow production, as the ice-cream is mass produced and each type of ice-cream is the same. Alexander: job production, as each customer wants individual attention. Each hairstyle is different to meet each customer’s needs. b) Batch production is the most suitable method, given that the components are standardised for use in several engines. The production of engines will not be large enough to make flow production viable.

13. Automation :  equipment used in the factory is controlled by computers to carry out mechanical processes, such as spray painting a car body. Mechanization : production is done by machines but is operated by people CAD (computer aided designing): a computer software that draws items being designed more quickly and allows them to be rotated, zoomed in and viewed from all angles. CAM (computer aided manufacturing): computers monitor the production process and controls machines and robots-similar to automation CIM (computer integrated manufacturing): the integration of CAD and CAM. The computers that design the product using CAD is connected to the CAM software to directly produce the physical design. EPOS (electronic point-of-sale): used at checkouts/tills where operator scans the bar-code of each item bought by the customer individually. EFTPOS (electronic funds transfer at point-of-sale): the electronic cash register at the till will be connected to the retailer’s main computer and different banks.

14. How Technology has changed Production methods CAM (computer aided manufacturing): computers monitor the production process and controls machines and robots-similar to automation

15. Advantages of technology in production Disadvantages of technology in production Greater productivity Greater job satisfaction among workers as boring, routine jobs are done by machines Better quality products Quicker communication and less paperwork More accurate demand levels are forecast since computer monitor inventory levels New products can be introduced as new production methods are introduced Unemployment rises as machines and computers replace human labour Expensive to set up New technology quickly becomes outdated and frequent updating of systems will be needed- this is expensive and time-consuming. Employees may take time to adjust to new technology or even resist it as their work practices change.