2.3.1 business operations

what is the process of business operations

activities involved in turning inputs into outputs

what things do businesses do when producing a product

make sure its

• at right quantity

• right quality

• right time

• right price

what are the production processes

batch production

job production

flow production

define job production

produce one of the unique products to meet exact requirements of the customer

what are the examples of doing job production

products can be highly differentiated

businesses can charge high prices

usually high quality

workers often have high job satisfaction

what are the disadvantages of doing job production

workers need to be highly skilled means expensive training cost

skilled labour means higher wages

high unit cost

hard to increase productivity

defne flow production

when products are moved continuously along a production line with each stage of adding something until the product is finished

what are the advantages of flow production

low unit cost because the output is high

little downtime (product is continuous)

consistent quality

workers work at a specialised area

fewer workers needed

what are the disadvantages of flow production

very expensive to buy machinery and set up the production line

business must be sure there is high demand

breakdown of one machine stops the production line

difficult to change the product design

low motivation for workers

define batch production

group of identical items is made together at the same time.

what are the advantages of batch production

lower unit cost

specialised machinery can be used

allows variety in products

workers can be specialised in certain tasks increasing efficiency

what are the disadvantages of batch production

time lost when switching batches

workers can lose motivation

less flexible than job production

higher storage cost for materials d partly finished goods.

define productivity

output per person in a given time period

what is the formula for productivity

productivity = output / number of workers

what happens to the labour cost when productivity increases and why does this happen

lower labour cost because the same wage is spread across more units.

how can business increase productivity

recruit appropriate staff

invest in training

improve working practices

invest in technology/ machinery

use motivation methods

why do businesses aim to reduce as much cost as they can

because it increase profit

what is the average cost per unit formula

average cost per unit = total cost / output

what is the efficiency like if the average cost is low

high efficiency

what is the efficiency like if the average cost is high

low efficiency

what happens to the average cost per unit when productivity increases

average cost per unit decreases

what does the business gain when the unit costs are low and the productivity is high

price flexibility, they can eep prices lower to compete with competitors and gain a competitive advantage.

what are the impacts of technology on production

cost

productivity

quality

flexibility

how does technology affect cost

technology is expensive to buy and maintain

business must weigh investment value and future developments

idle machinery = wasted cost

how does technology affect productivity

machinery increase output speed and reduced unit cost

higher efficiency as since it does not take any breaks

but breakdown can stop the production

how does technology affect quality

technology ensures that the quality has met the standards and reduces human error

fewer workers needed so it reduces the cost

how does technology affect flexibility

older machines are less flexible

modern technology can be programmed to meet customers requirements.