1a. Business Operations - Different Types of Production Process

What is production?

The transformation of resources (e.g. raw materials components and processes) into finished goods or services

What are the methods of production?

• Job production

• Batch production

• Flow production

What does the method of production used by a business depend on?

• The level of output required to be produced

• The type of the product (e.g. physical or non-physical, durability, complexity)

• Whether the product is standardised or customised

• The level of automation (use of machinery, technology or robots) used in production

What is job production?

Manufacturers produce one product at a time when ordered by the customer

• High quality product

• Motivated and highly skilled workers

• Customised products can be produced

• Production is slow

• High labour costs

What is flow production?

Continuous manufacturing of standardised products, usually on a product line

• Low unit costs due to economies of scale (occurs when increasing output by a business leads to lower long-run average costs)

• Rapid production

• Usually highly automated (capital intensive - predominantly using machinery in the production of goods/services)

• Customisation is difficult

• Capital equipment can be expensive to purchase

What is batch production?

Groups of the same product are produced as a batch e.g. 1000 blueberry muffins

• Workers can specialise

• Production can take place as soon as the previous ‘batch’ starts running out

• Requires careful coordination to avoid shortages

• Money is occupied in stock

• Completed products need to be stored

How should a business choose a method of production based on customer needs and demand?

• Flow Production: Suitable when selling price is a key driver of demand. Minimises unit costs for mass-market products

• Job Production: Ideal when quality or customisation is important. Used for bespoke or high-quality products

• Batch Production: Best when moderate customisation or quality is needed, but production volumes are not as high as in flow production