What is the optimal mix of resources for operations?

• Labour intensive processes

• Capital intensive processes

Labour-intensive processes:

Key features:

• Labour costs are higher than capital costs

• Costs are mainly variable

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

Examples:

• Hotels and restaurants

• Fruit farming/picking

• Hairdressing and other personal services

Capital-intensive processes:

Key features:

• 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

Examples:

• Oil extraction and refining

• Car manufacturing

• Pharmaceutical production