AICE Business Chapter 23

Job production

used for the
production of single, one-off
products.

Batch production

Batch production involves the
production of identical
products in groups.

Flow production

individual
products move from stage to stage
of the production process without
waiting for any other products.

Mass customization

customers
demand competitive prices
and product variations or
customization.

Advantage of labor intensive operations

Lower initial costs
○ Due to less machinery required
● Flexibility in production
● Ability to customize products easily

Disadvantages of labor intensive operations

● Higher labor costs
● Quality inconsistency
● Limited economies of scale

Examples of labor intensive operations

○ Agriculture
○ Mining
○ Hospitality
○ Food Service

Advantages of capital intensive operations

High production capacity
○ Machines can run 24/7
Consistent quality
Lower labor costs
Reduced human error

Disadvantages of capital intensive operations

High initial investment
Limited flexibility
Maintenance costs
Vulnerability to breakdowns
Potential job losses

Examples of capital intensive operations

Automobile manufacturing
○ Oil production and refining
○ Steel production
○ Telecommunications
○ Transportation

What is productivity?

Productivity is a relative measure and is
concerned with how efficiently inputs are
converted into outputs.

Why is productivity important?

Productivity is important because
it is one of the main factors that
determine the competitiveness of
a business.

What is efficiency?

Achieving maximum
productivity with minimum wasted effort
or expense.

Why is efficiency important?

Efficiency is important
because it determines the
average cost of production.

What is effectiveness?

The degree to which
something is successful in producing a
desired result; success.

Why is effectiveness important?

Effectiveness is important
because it means customers’
needs are being met.

How can operations managers increase added value?

Operations managers can increase added
value by effectively managing efficiency of production, quality, and flexibility and innovation.