2.4 : Resource Management

Vocabulary-style flashcards covering key terms and formulas from Resource Management: Production, Productivity, Efficiency, Capacity Utilisation, Stock Control, and Quality Management.

Production

The transformation of resources (e.g. raw materials, components and processes) into finished goods or services.

Goods

Physical products, such as bicycles and T-shirts.

Services

Non-physical items, such as hairdressing, tourism and manicures.

Job production

Producing one item at a time, as ordered by the customer.

Batch production

Groups of the same product are produced before moving on to a group of different products.

Flow production

Continuous manufacturing of standardised products, usually on a production line.

Cell production

This involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process.

Productivity

The output per input (person or machine) per hour.

Labour productivity

A measure of the output per worker during a specified period of time, calculated using the formula $\frac{\text{Output}}{\text{Number of workers}}$.

Capital productivity

A measure of the output of capital employed (e.g. machinery) during a specified period of time, calculated using the formula $\frac{\text{Output}}{\text{Number of machines}}$.

Competitiveness

The ability of a business to maintain or grow its sales and market share, given the presence and actions of rivals.

Efficiency

The ability of a business to use its production resources as cost-effectively as possible, often measured in terms of the average cost per unit.

Average cost per unit

The total production cost divided by the number of units produced, calculated with the formula $\frac{\text{Total costs}}{\text{Number of units}}$.

Labour-intensive production

Production that predominantly uses physical labour in the production of goods or services.

Capital-intensive production

Production that predominantly uses machinery and technology in the production of goods and services.

Capacity utilisation

A measure of the level to which a business's assets are being used to produce output compared to maximum possible output, calculated as $\frac{\text{Current output}}{\text{Maximum possible output}} \times 100$.

Buffer stock

The lowest level to which a business is willing to allow stock levels to fall, also known as the minimum stock level.

Reorder level

The level of stock at which a business places a new order with its supplier.

Lead time

The length of time from the point of stock being ordered from the supplier to it being delivered.

Just-in-time (JIT) stock management

A process in which raw materials are not stored on-site; stock is ordered as required and delivered by suppliers just in time for production.

Lean production

An approach to production that involves the reduction of all types of wastage, including time, resources and space.

Quality control

Inspecting the quality of output at the end of the production process to check that the product is fit for purpose.

Quality assurance

Inspecting the quality of production throughout the entire production process to identify issues early.

Total quality management (TQM)

Organisation of the business with quality at its core and with every worker responsible for maintaining quality standards.

Kaizen

A Japanese term for continuous improvement, involving small, ongoing changes to eliminate waste and improve productivity.