Operations- Resource Mix

What is the optimal mix of resources for operations?

• Labour intensive processes

• Capital intensive processes

What are the key features of labour-intensive processes?

• Labour costs are higher than capital costs

• Costs are mainly variable

• Labour supply (quantity and quality) and cost are key issues

What are the examples of labour-intensive processes?

• Hotels and restaurants

• Fruit farming/picking

• Hairdressing and other personal services

What are the key features of capital-intensive processes?

• Capital costs are higher than labour costs

• Costs are mainly fixed (including depreciation)

• Significant investment is often required (e.g automation) but with longer-term benefits on unit costs

What are the examples of capital-intensive processes?

• Oil extraction and refining

• Car manufacturing

• Pharmaceutical production