10 Questions
What is the primary advantage of mass customization?
It allows customers to personalize products while maintaining efficiency through mass production.
How is mass customization achieved in manufacturing?
By using flexible computer-aided technology on production lines to make customized products.
Give two examples of industries that employ mass customization.
Automobiles and technology products (laptops).
What factor would influence a business to choose mass customization over mass production?
Customer demand for customized products.
State one circumstance that may necessitate a change in production method for a business.
An increase in demand for the product.
What is a key factor that influences the choice of production method for a business?
The size of the target market (small or large).
Express the relationship between labor cost and the need for change in production method.
If labor costs increase, a business may need to adopt a different production method.
What type of strategy should a business adopt when choosing a production method?
A context-specific strategy, as there is no perfect fit for all business situations.
Explain the role of capital in the choice of production method for a business.
The capital available to the business influences its ability to invest in expensive capital goods required for certain production methods.
How does the availability of skilled labor influence the choice of production method?
If skilled labor is required for customized products, a business may need to adopt a production method that accommodates skilled workers.
Study Notes
Operations Management Definition
- Operations management concerns the use of resources (inputs) to provide outputs in the form of goods and services.
Factors of Production
- Land (nature’s renewable & non-renewable resources)
- Labour (manual or skilled)
- Capital (tools, machinery, computers, other equipment) & intellectual capital
- Enterprise (driving force, provided by risk-taking individuals)
Intellectual Capital
- Human capital (well-trained & skilled employees)
- Structural capital (database and information system)
- Relational capital (good links with suppliers & customers)
The Transformational Process
- An activity or group of activities that transforms one or more inputs, adds value to them & produces outputs for customers.
- Applies to both manufacturing (tangible goods) and service (intangible) industries.
Aim of Operations Management
- Produce goods and services of the required quality, in the required quantity, at the time needed, in the most cost-effective way.
Adding Value through Operations
- Production efficiency: keeping costs as low as possible
- Quality: the goods or services must be suitable for the purpose intended
- Flexibility & innovation: developing and adapting to new processes and new products
Productivity Vs. Level of Production
- Productivity: the efficiency with which resources are used (output per person employed)
- Level of Production: the number of units produced in a given time period
High Productivity Vs. Success
- High productivity does not guarantee success, other factors like quality, efficiency, adaptability, and market demand play a crucial role.
Raising Productivity
- Improve the skill levels of employees through training
- Improve worker motivation
- Purchase technologically advanced equipment
- More effective management of resources
Efficiency Vs. Effectiveness
- Efficiency: producing output at the highest ratio of output to input
- Effectiveness: meeting the objectives of a business by using inputs productively to meet customers’ needs
Sustainability
- Business operations that can be maintained for a longer term, protecting the environment and not damaging the quality of life for future generations
- Achieved by:
- Applying low carbon footprint method of production
- Reusing recyclable material
- Manufacturing recyclable products
- Reducing use of plastics & other non-biodegradable materials
Labour Vs. Capital Intensive
- Labour Intensive: higher level of labour being employed as compared to capital equipment
- Capital Intensive: higher level of capital equipment being employed as compared to labour
Factors to Consider While Choosing the Method
- The Nature of the Product & its Brand Image
- The Relative Cost of Labour & Capital
- Business Size & Access to Finance
Operations (Production) Methods
- Job Production: one-off item specially designed for a customer
- Batch Production: limited number of identical products
- Flow Production: continually moving process
- Mass Customization: production method that combines elements of both mass production and customization
Learn about operations management and factors of production in business. Understand the use of resources such as land, labor, and capital to provide goods and services. Explore how inputs are transformed into outputs.
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