Business Studies 0450 IGCSE Revision Notes - Lesson 4.1 Production of Goods & Services

This set of flashcards covers key vocabulary and concepts from the lesson on the production of goods and services, focusing on productivity, efficiency, inventory management, technology, and sustainable practices.

Production

The process of converting inputs into salable goods.

Productivity

The efficiency of inputs used, calculated with the formula: Labour productivity = Total Output / Number of production workers.

Efficiency

How effectively a business utilizes inputs.

Benefits of Efficiency

+ Save cost
+ increase output
+ Increase quality
+ Increase profit

Ways to Increase Efficiency

1. Increase employee skills -> achieved through training
2. Introduce automation technology -> 24/7 + mostly faster

Inventory

The stock of raw materials, work-in-progress, and finished goods.

Purpose of Inventory

+ Keep raw materials & components
+ Help reach Economy of Scale

+ meet customers demand
+ ⬆production rate

Lean Production

A production approach that focuses on minimizing wastage.

JIT (Just-In-Time)

A production strategy where raw materials are ordered only when needed, reducing inventory costs.

Advantages of JIT

+ Reduce storage cost
+ Improve liquidity💧
+ ❌Overproduction

Disadvantages of JIT

- Harder to cope with changes in demand
- Not enough for demand
-> Lose potential sales
-> Delay

Kaizen

A philosophy of continuous improvement in the production process.

Advantages of Kaizen

Increases employee motivation if suggestions are implemented and reduces mistakes, enhancing quality.

Disadvantages of Kaizen

Requires training → increasing costs and may meet resistance to changes.

CAD (Computer-Aided Design)

A software used to assist in product design, which is cheaper, quicker, and more accurate than human design.

CAM (Computer-Aided Manufacturing)

Technology that aids in manufacturing control and reduces human error.

3D Printing

A process that creates tangible products from digital designs, enabling prototypes and custom production.

Benefits of Technology

Includes faster production, lower labor costs, high accuracy, flexibility, and customization.

Sustainable Production

Production practices that focus on renewable energy, fewer resources, reusing, recycling, and developing environmentally friendly products.

Advantages of Sustainable Production

Improves brand image and competitiveness, while enhancing recruitment.

Disadvantages of Sustainable Production

May increase costs and pose challenges in supply and imitation for competitors