efficiency and productivity

What is 'rotation cell production'?

A system where work is organised into separate units with each team taking responsibility for their area.

What is the Kaizen concept in manufacturing?

A suggestion management scheme program where employees are encouraged to regularly contribute ideas to management.

How does time-based management improve efficiency?

By cutting out wasted time in design and manufacturing processes.

What are CAD and CAM used for in modern manufacturing?

They are technologies used to improve efficiency in design and manufacturing.

Explain the Just-In-Time (JIT) inventory system.

Inventory is only brought in when required to fulfill customer orders, meaning no buffer stock is held.

What does it mean for a production system to be 'capital intensive'?

It is a system that relies more on machinery and equipment rather than a large labour force.

What are the key factors for the success of lean production?

Excellent communication and high levels of cooperation with suppliers, reliable and flexible employees, a flexible approach to staff management, clear communication of employee benefits and incentives, and suitable equipment.

What are the three main factors of production for any business?

Labour, land, and capital equipment.

How do high wages impact a firm's costs and competitiveness?

High wages increase variable costs, making the firm less competitive.

What determines the optimal balance of resources a firm uses?

The nature of the firm, for example, mass production is more capital intensive, while service providers are more labour intensive.

What is the primary goal of lean production techniques?

To reduce waste from the manufacturing process.

Describe Just In Time (JIT) manufacturing as a lean production technique.

Goods are made to order, and components are ordered only once a customer places an order.

What is Kaizen's role within lean production?

It is a system where continuous improvements are sought by the workforce through their opinions and problem-solving.

What are some practical applications of lean production, as exemplified by Toyota?

Avoiding unnecessary parts, reducing all forms of waste, finding the source of defects, maintaining a tidy and organized work environment, replenishing components only when needed, and encouraging employees to problem solve.

How is efficiency generally measured?

By the inputs used to generate output.

What is the outcome when a process becomes efficient?

It uses fewer inputs to produce a given output, and unit costs should fall.

How can efficiency be described in terms of resource use?

Using resources effectively.

What is a primary way a business can increase efficiency?

Increase labour productivity.

Name three methods to increase labour productivity.

Offer incentives, provide training, and invest in machinery.

How can extending the overall scale of production help increase efficiency?

It can lead to economies of scale.

What does choosing an optimal mix of resources involve?

Deciding between capital-intensive (machinery) and labour-intensive (employees) production methods.

What production methods can be introduced to increase efficiency?

Lean production, including TQM, JIT, and Kaizen.

Besides specific production methods, what general tool can businesses use to increase efficiency?

Using technology.

What are economies of scale?

They arise when unit costs fall as output increases.

What are diseconomies of scale?

The disadvantages an organisation experiences due to an increase in size, resulting in a decrease in efficiency and an increase in unit costs.

What is an index number used for in business calculations?

To compare values, often across different years, using percentages.

What are the four main factors of production (inputs) used by a business?

Land, Labour, Capital, and Enterprise.

What is the primary characteristic of capital intensive production?

It involves a significant investment in machinery and technology rather than human labour, as seen in car manufacturing.

What is the primary characteristic of labour intensive production?

It relies more on human workers than on machinery, typical in sectors like restaurants.

Why might large-scale or mass production favor capital intensive methods?

Capital equipment often provides more consistent output and efficiency for producing products in vast quantities.

When might labour intensive production be more suitable for product customization?

When products are specifically designed for individual consumers or require bespoke attention (job production), making the skill of labour more important.

In what types of businesses are the skills of workers a critical factor leading to labour intensive production?

Businesses that heavily depend on the specific skills of their workers, such as hairdressers.

How do relative costs of labour and capital in regions like Western Europe influence production method choices?

High labour costs in Western Europe often incentivize businesses to replace expensive labour with more cost-effective capital equipment.

How might the availability of cheap labour in countries like China or India influence production methods?

Cheap labour in these regions can make labour intensive production a more economically viable option, especially if capital equipment is expensive or unreliable.

How does the size and financial position of a business impact its choice between capital and labour intensive production?

Smaller businesses with cash-flow difficulties might opt for labour intensive methods because capital equipment is expensive to acquire; larger, financially stable businesses can afford capital investment.

For what type of product is capital intensive production often most effective?

Highly standardized products that can be produced in vast quantities at low unit costs using machinery.

Why might a service that requires personal contact or interaction favor labour intensive methods?

Customers often prefer the sociable nature, personal contact, and direct interaction provided by human workers in services like banking or personal care.

What is one way a business can increase efficiency and labour productivity?

By extending the overall scale of production.

What is the primary reason internal economies of scale are an advantage for an organisation?

As output increases and the business grows, unit costs fall.

How do technical economies of scale increase efficiency and labour productivity?

Through new machinery, mass production techniques, and employing specialists, which lower unit costs, improve quality, and enhance productivity.

How does specialisation contribute to increased efficiency as an economy of scale?

Staff are able to specialise, becoming even more skilled in their role, which increases overall efficiency.

Explain how purchasing economies of scale lead to lower unit costs.

Large firms can engage in bulk-buying, which often results in greater discounts from suppliers.

How do marketing economies of scale improve the effectiveness of advertising and reduce unit costs?

Large firms can afford more expensive media and market research, increasing advertising effectiveness and reducing unit costs due to scale.

What financial advantages do large companies gain through economies of scale?

They can obtain loans easily at lower interest rates and have easier access to funds from retained earnings and shareholders.

How do research and development economies of scale benefit a business?

They enable large companies to invest more extensively in innovation and development, leading to the discovery of new products and more efficient production methods.

How do social and welfare economies of scale improve staff retention and morale?

By providing social facilities (e.g., canteens) and welfare benefits (e.g., health insurance, pensions), staff sickness and turnover are reduced, and morale is boosted.

How do managerial and administrative economies of scale contribute to a business's competitiveness?

By enabling the employment of the best managers and the adoption of more cost-effective administrative procedures, which reduces overheads and improves competitiveness.

What are diseconomies of scale?

Disadvantages that arise when organisations expand, leading to a lowering of efficiency and higher unit costs.

How does a loss of co-ordination lead to diseconomies of scale?

Management loses control as the organisation becomes too complex with many departments and hierarchy levels, leading to wider spans of control and decreased efficiency.

How do communication problems contribute to diseconomies of scale in large hierarchies?

In large hierarchies, employees may feel less valued and struggle to work due to increased distance and potential communication breakdowns, leading to demotivation and reduced efficiency.

Explain how motivation issues arise in diseconomies of scale.

Employees may feel unvalued and demotivated due to a lack of individual recognition and reward in larger organisations, leading to decreased productivity.