Unit 7: Production

production

• the process of converting inputs such as land, labour, and capital into saleable goods, for example shoes and cell phones

• inputs → transformation → outputs

• objective:

-produce a specific product on schedule and at minimum cost

-concentrate on quality and product reliability

-produce max possible volume of output

-fully utilizing the plant or the workforce

-reduce lead time

-generate the maximum return on assets

-ensure flexibility for product or volume changes

inventory

• the stock of raw materials, work-in-progress and finished goods held by a business

• hàng tồn kho

• advantages

-give protection against temporary price rises, orders get lost, incorrect or defective shipments

-allow you to meet variation in product demand, to be more flexible in product scheduling

• disadvantage

-inventories require various costs: storage → warehouse, handling goods → labour cost => this money can be more profitably spent in other ways

-risk of obsolescence (esp for high-tech products), theft, breakage

lean production

• the production of goods and services with the minimum waste of resources (sản xuất tinh gọn)

• objectives: to cut down on waste and to increase efficiency

• types of waste that can occur in production

-overproduction: produce goods before they have been ordered → high storage cost+damage to goods while in storage

-waiting: happen when goods are not moving or being processed in any way

-transportation: moving goods around unnecessarily → not add value to the product+goods many be damaged when being moved around

-unnecessary inventory: too much inventory → takes up space+costs money

-motion: any actions of employees → waste time (this also applies to the movement of machines which may not necessary)

-over-processing: if complex machine is being used to perform simple tasks → wasteful

-defects: any faults require the goods being fixed → waste time in inspecting products

• lean production can be achieved by using these following methods:

-kaizen: continuous improvement, focus on the elimination of waste

-JIT (just-in-time)

-cell production: a production method in which workers and machines are organized into small groups (called cells), with each cell responsible for producing a particular product or a specific part of a product instead of having a flow or mass production. this method improves employee’s morale+makes them work harder → more efficient, employees feel more valued so they are less likely to cause disruption

job production

• the production of items one at a time,

• this is where products are made specifically to order

• eg: customized wedding cake

batch production

• batch production is a production method in which a group of identical products is manufactured together in a specific quantity before moving on to the next batch.(1 mẻ bánh mì) - sản xuất theo lô

• this is where similar products are made in blocks or batches. where a certain product is made → another product is made and so on

• eg: clothing: a batch of particular size of jeans is produced and then a batch of another size

flow production

• the production of very large quantities of identical goods using a continuously moving process

• this is when large quantities of a product are produced in a continuous process and the products move continuously along a production line

• large numbers of identical products are made and the costs of production are low (large scale)

• eg: cars, televisions…

just-in-time (JIT)

• is a production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventories of the finished product

• the raw materials are delivered JIT to be used in production process, the making of any parts is undertaken JIT to be used in the next stage of production, the finished product is made JIT to be delivered to the customer

• advantages:

-reduce the costs of holding inventories

-reduce cost of warehouse (since it is not needed)

-finished products are sold quickly → money come back to the business more quickly → help with cash flow

• disadvantage

-rely heavily on the suppliers and a very efficient system

obsolescence (n)

sự lỗi thời, sự lạc hậu (vì đã có cái mới thay thế)

economies of scale

• lợi thế kinh tế theo quy mô

• hiện tượng khi chi phí trung bình trên mỗi đơn vị sản phẩm giảm khi 1 doanh nghiệp gia tăng quy mô sản xuất hoặc sản lượng đầu ra