Lecture Notes on Productivity and Inventory Management

Flashcards covering productivity, efficiency, inventory management, and lean production techniques discussed in the lecture notes.

What is productivity?

Productivity is the output measured against the inputs used to create it.

How does a change in production layout increase productivity?

It helps to eliminate time wastage caused by movement.

How does motivation through performance-related pay boost productivity?

It forces employees to produce more in a given period.

How does effective supervision boost productivity?

It ensures employees do not waste time.

How does upgrading machinery increase productivity?

It helps to eliminate leakages of raw materials and downtime.

What is a result of ineffective supervision?

Employees waste production time.

What is a consequence of demotivated employees?

Employees do not put in extra effort, leading to low output.

What are the drawbacks of using old equipment?

It leads to an increase in leakage and downtime.

What are the benefits of increasing efficiency/productivity?

Reduced cost per unit, increased profitability, and potential for employee motivation through higher salaries.

How does increased productivity reduce cost per unit?

Fixed costs are spread over many units.

How does increased productivity increase profitability?

More goods will be produced at a lower cost.

What are the problems of holding inventory?

Ties up capital, increases storage expenses, and risk of obsolescence.

What is a disadvantage of holding inventory concerning production?

Possible delays in production leading to lower output.

What is a disadvantage of holding inventory concerning purchasing?

No purchasing economies of scale which could help cash outflows.

What is a risk related to inventory and customer orders?

Not being able to meet orders, which could damage reputation.

How does inventory affect a business's capital?

Capital is tied up in inventory, which means the business may have cash flow problems.

What expenses increase due to inventory?

Storage expenses like insurance, warehouse rent, and security costs.

How can aging or obsolete inventory impact a business?

Inventory can become out of date or obsolete, which can reduce the profits of a business.

What is lean production?

A term used by businesses to cut down on waste and therefore improve efficiency.

What does lean production cut down on?

Any activities that do not add value to the customer.

What is Just-in-time inventory control?

A method to achieve lean production

How does producing at a lower cost give a business a competitive advantage?

The business will have competitive advantage by producing at a lower cost as compared to competitors.

What does inefficiency imply?

A low input-output ratio, low productivity, high cost per unit, loss of competitiveness, and failure to satisfy orders.

What is inventory?

Items (raw materials, work in progress, and finished goods) held by the business for use or for resale purposes.

What must the production manager ensure regarding inventory?

The business has the right quantities of inventory at any particular time.

Why is inventory held to meet unexpected demand?

This helps to maintain customers.

How does inventory prevent production stoppages?

To avoid production stoppages due to stock outs when suppliers fail to deliver goods on time.

How does inventory act as a hedge?

Helps to hedge against inflation or price increases.

What are the benefits of holding low levels of inventory?

Lower inventory holding costs help reduce variable costs, lower security/rent costs, and more flexible adaptation to different batches.

What happens in a method of production where goods are produced only when there is a market order?

The business will not keep inventory! of raw materials and finished goods.

What are the advantages of Just in Time?

Helps to eliminate or reduces cost of holding inventory,Warehouse space is not needed,Money will come back to the business more quickly, helping its cash flow

What are disadvantages of Just in time?

Just in time requires reliable suppliers of raw materials,flexible employees,The business may also lose bulk buying discounts.

What does Kaizen focus on?

Elimination of waste.

What do Small groups of workers do in Kaizen?

Meet regularly to discuss problems and possible solutions.

What can the Kaizen method get rid of?

Piles of inventory or reduced the amount of time taken, for workers to walk between jobs so that they eliminate unnecessary movements.