Production Management and Productivity

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Questions and Answers

Explain two ways that a business can improve its production efficiency.

Businesses can increase production efficiency by improving employee skills through training, which reduces waste and increases output. Additionally, automation using machinery and IT equipment can speed up production processes, minimize errors, and enhance overall efficiency.

What is the purpose of inventory management in a business, and why is it important?

Inventory management is crucial for businesses to ensure they have enough raw materials, work-in-progress goods, and finished goods to meet customer demand. It helps avoid stockouts, which can lead to lost sales and dissatisfied customers. Moreover, efficient inventory management minimizes holding costs and ensures timely replenishment.

Describe the relationship between productivity and average costs of production.

Productivity and average costs of production are inversely related. When productivity increases, meaning more output is produced per unit of input, the average cost of producing each unit decreases. This is because fixed costs are spread over a larger number of units, resulting in lower costs per unit.

What are the potential consequences for a business if it fails to manage its inventory levels effectively?

<p>Ineffective inventory management can have significant negative consequences, including stockouts, leading to missed sales and customer dissatisfaction. Excess inventory can also lead to high storage and maintenance costs, tying up valuable capital. Furthermore, outdated or spoiled inventory can result in financial losses.</p> Signup and view all the answers

What is the purpose of a 'reorder level' in inventory management?

<p>The reorder level serves as a trigger point for replenishing inventory. When the inventory level reaches the reorder level, the business places an order for more stock to ensure that it doesn't run out of goods before the new supply arrives.</p> Signup and view all the answers

Explain the concept of 'lead time' in inventory management and its importance.

<p>Lead time is the duration between placing a reorder order for inventory and receiving the new supply. It is crucial for determining the reorder level and ensuring that the business has enough buffer inventory to meet demand during the lead time.</p> Signup and view all the answers

What are the potential benefits of investing in training for employees to improve their skills?

<p>Investing in training can result in a more skilled and productive workforce. Trained employees are better equipped to perform their tasks efficiently, minimizing waste and increasing output. This translates to lower costs, improved product quality, and enhanced competitiveness.</p> Signup and view all the answers

Explain the importance of quality control and assurance systems in production.

<p>Quality control and assurance systems are critical for maintaining consistent product quality and minimizing waste. They identify and address potential problems in the production process, ensuring that final products meet customer expectations. This helps prevent defects, rework, and customer complaints, ultimately enhancing customer satisfaction and loyalty.</p> Signup and view all the answers

Describe two ways in which technology can contribute to greater productivity in a manufacturing setting.

<p>Technology can contribute to greater productivity through automation, which allows for faster and more efficient production processes, and through the use of CIM, which streamlines the design and manufacturing process.</p> Signup and view all the answers

Explain the concept of CAD and how it can be utilized to design products.

<p>CAD, or Computer Aided Designing, refers to a software that allows for digital product design. It enables faster and more versatile design processes, allowing for 3D visualization and modification of designs.</p> Signup and view all the answers

What are two drawbacks of employing advanced technology in manufacturing, particularly concerning workforce implications?

<p>One drawback of advanced technology in manufacturing is the potential for unemployment, as machines displace human labor. Another challenge is that employees may require time to adapt to new technologies, which can lead to resistance or a decline in work satisfaction.</p> Signup and view all the answers

Identify and describe a production type that is often favored by small businesses with limited capital.

<p>Batch production is often favored by small businesses with limited capital, as it involves producing goods in batches, allowing for flexibility and less investment in large-scale automated systems.</p> Signup and view all the answers

Why might a company choose to use mechanization instead of automation in its production process?

<p>A company might choose mechanization over automation when the production process doesn't require the complex control and precision of automated systems. Mechanization offers a more cost-effective solution for simpler tasks.</p> Signup and view all the answers

Explain the relationship between CIM and CAD and CAM.

<p>CIM, or Computer Integrated Manufacturing, integrates CAD and CAM systems. The design data generated in CAD is directly transmitted to the CAM software for manufacturing, eliminating the need for manual data transfer and minimizing errors.</p> Signup and view all the answers

What is the purpose of EPOS technology in retail settings?

<p>EPOS, or Electronic Point-of-Sale technology, is utilized in retail settings to streamline checkout processes. It automatically scans and processes bar codes, calculates prices, and generates receipts. Moreover, it can also automatically track inventory, reducing the risk of stock shortages.</p> Signup and view all the answers

Explain the relationship between EFTPOS and electronic cash registers in retail settings.

<p>EFTPOS, or Electronic Funds Transfer at Point-of-Sale, is integrated with electronic cash registers in retail settings. Customers use debit cards at the EFTPOS terminal, which is linked to the retailer's computer and various banks, enabling instant transaction and withdrawal of funds.</p> Signup and view all the answers

Describe the concept of lean production and its key objective.

<p>Lean production is a set of techniques aimed at reducing waste and increasing efficiency/productivity in a firm.</p> Signup and view all the answers

Identify and explain two types of waste in lean production, providing an example of each.

<p>Two types of waste in lean production include overproduction, producing more than needed, leading to high inventory costs and wasted resources. Waiting occurs when goods are not being moved or processed, resulting in idle time and increased production lead times.</p> Signup and view all the answers

What are the benefits of implementing lean production practices in a manufacturing setting?

<p>Benefits include reduced storage costs, quicker production times, reduced need for repair, lower overall costs, more competitive pricing, and the potential for higher profits.</p> Signup and view all the answers

Explain the concept of Kaizen and how it contributes to lean production.

<p>Kaizen emphasizes continuous improvement by involving workers in identifying and addressing problems. This improves efficiency and reduces waste by leveraging the knowledge of those closest to the production process.</p> Signup and view all the answers

What is Just-in-Time inventory control and how does it work?

<p>Just-in-Time (JIT) eliminates the need to hold inventory by ensuring supplies arrive only when needed. Parts are made just in time for the next production stage, and finished goods are produced just in time for delivery.</p> Signup and view all the answers

What are the main advantages of using the Just-in-Time (JIT) inventory control system?

<p>The benefits of JIT include reduced inventory holding costs, elimination of warehouse space, faster cash flow due to immediate sales of finished goods, and less waste of materials and time.</p> Signup and view all the answers

Describe the concept of cell production and its advantages.

<p>Cell production divides the production line into self-contained units, each responsible for a specific part of the finished product. This improves worker morale and efficiency by fostering teamwork and specialized expertise.</p> Signup and view all the answers

Explain the characteristics and advantages of job production.

<p>Job production involves making customized products to order, meeting the specific requirements of each customer. This method is suitable for unique products and allows for greater flexibility and customer satisfaction.</p> Signup and view all the answers

What are the disadvantages of using job production?

<p>Disadvantages include the need for skilled labor (often expensive), higher production costs due to labor intensity, longer production times, potential for costly errors, and the need for specially purchased materials for each order, which adds further expense.</p> Signup and view all the answers

What are the main disadvantages of batch production?

<p>Disadvantages include high costs associated with moving finished and semi-finished goods, machine reset time between batches which delays production, and the need for large amounts of raw materials for different batches, all contributing to higher costs.</p> Signup and view all the answers

Explain the concept of flow production, highlighting its key advantages.

<p>Flow production involves producing large quantities of identical products in a continuous process on a production line. This method offers high output, low long-run costs, potential economies of scale, 24/7 production capability, and efficient, fast production.</p> Signup and view all the answers

Identify the key factors influencing the choice of production method for a business.

<p>Factors include the nature of the product (customized vs. standardized), size of the market (large vs. niche), and the nature of demand (steady vs. fluctuating).</p> Signup and view all the answers

How does the nature of demand influence the choice of production method?

<p>Steady and predictable demand often favors flow production, as it allows for continuous production and efficient utilization of resources. If demand fluctuates, batch or job production may be more suitable to adjust output based on changing needs.</p> Signup and view all the answers

Provide an example of a type of product where job production would be most suitable.

<p>A custom-made wedding cake would be most suitable for job production, as it requires unique designs and personalized details to meet individual customer preferences.</p> Signup and view all the answers

Flashcards

Batch Production

A manufacturing process that produces goods in groups or batches.

Job Production

A production method focused on creating unique or customized products for specific clients.

Automation

The use of computers to control mechanical processes in manufacturing.

Mechanization

The process of using machines to help production, operated by humans.

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CAD (Computer Aided Design)

Software that enables faster item design and 3D visualization.

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CAM (Computer Aided Manufacturing)

Systems that control machinery and robots during the manufacturing process.

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CIM (Computer Integrated Manufacturing)

Integration of CAD and CAM for direct production from designs.

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Advantages of Technology in Production

Benefits include increased productivity, quality, and communication.

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Production

The management of resources to produce goods and services effectively.

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Operations Department

Department responsible for overseeing the production process in a firm.

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Productivity

A measure of efficiency, calculated by output versus inputs used over time.

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Labour Productivity

A specific measure of productivity focusing on employee output.

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Inventory Management

The process of overseeing raw materials, work-in-progress, and finished goods.

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Reorder Level

The inventory point at which new stock must be ordered to avoid shortages.

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Lead Time

The time taken for new inventory to arrive after an order is placed.

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Buffer Inventory Level

The minimum amount of inventory a business should maintain to meet demand.

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Lean Production

Techniques to reduce wastage and increase efficiency in a firm.

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Overproduction

Producing goods before orders are received, leading to high costs.

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Waiting

Time during which no movement or processing of goods occurs.

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Transportation

Unnecessary movement of goods that wastes time and risks damage.

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Unnecessary Inventory

Excess inventory occupying space and incurring costs.

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Motion

Unnecessary movements of employees or machines resulting in waste.

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Over-processing

Using complex methods for simple tasks, leading to inefficiency.

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Defects

Faults in goods or equipment causing production delays.

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Kaizen

'Continuous improvement' through worker suggestions to enhance efficiency.

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Just-in-Time (JIT)

A technique ensuring supplies arrive just when needed for production.

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Cell Production

Divide production into self-contained units, each focusing on a part.

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Flow Production

Continuous production of large quantities of standardized products.

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Factors affecting Production Method

Nature of product, market size, and demand dictate production methods.

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Study Notes

Production Management

  • Production is the efficient management of resources to create goods and services.
  • Operations departments oversee the production process. Their responsibilities include:
    • Resource management: using resources cost-effectively.
    • Inventory management: effectively managing stock levels.
    • Output management: meeting customer demand with the required output.
    • Quality control: meeting customer quality standards.

Productivity

  • Productivity measures the efficiency of inputs used in production.
  • It's calculated as output divided by inputs.
  • Labour productivity: measures employee efficiency in producing output.
    • Formula: Output/Labour input
  • Businesses increase productivity to lower average production costs, sell more, and lower prices.
  • Ways to increase productivity:
    • Employee training: improving labour skills.
    • Automation: using machinery and IT to control production faster and more error-free.
    • Motivating employees: encouraging higher output and efficiency.
    • Improved quality control: avoiding resource waste.

Inventory Management

  • Inventory includes raw materials, work-in-progress, and finished goods.
  • Finished goods are stored to handle unexpected demand increases.
  • Reordering occurs when inventory reaches the reorder level to reach the maximum level again.
  • Lead time is the time it takes for reordered inventory to arrive.
  • High inventory holding costs can arise from excessively large inventory levels.
  • Buffer inventory is the minimum level to meet demand during lead time.

Lean Production

  • Lean production aims to minimise waste and increase efficiency.

  • Seven types of waste:

    • Overproduction: producing before orders.
    • Waiting: idle goods or processes.
    • Transportation: unnecessary movement of goods.
    • Unnecessary inventory: excess stock.
    • Motion: unnecessary employee or machine movement.
    • Over-processing: using more complex processes than necessary.
    • Defects: faulty products needing repair.

  • Lean production benefits include:

    • Reduced inventory costs
    • Faster production speed
    • Higher customer satisfaction
    • Lower costs and more competitive prices; higher profits

  • Lean production methods:

    • Kaizen: continuous improvement through worker problem-solving in small groups.
    • Just-in-Time (JIT) inventory: supplies arrive only when needed for production.
    • Cell Production: dividing production into self-contained units.

Methods of Production

  • Job Production: customized products for individual orders (e.g., wedding cakes).

    • Advantages: Meets precise customer requirements, offers worker variety.
    • Disadvantages: expensive, labor-intensive, slow, expensive errors.

  • Batch Production: producing similar products in batches (e.g., cookies, houses).

    • Advantages: Flexible, provides worker variety, offers consumer choice.
    • Disadvantages: Expensive to move goods, machinery resetting delays.

  • Flow Production: mass production of standardized products on a continuous line (e.g., soft drinks).

    • Advantages: High output, low costs, economies of scale.
    • Disadvantages: Low job satisfaction, high inventory costs, high capital expenditure.

Factors Affecting Production Method

  • Product nature (customized vs. standardized).
  • Market size (large markets benefit flow production).
  • Demand variability (stable vs. fluctuating).
  • Business size (small businesses may prefer batch/job production).

Technology in Production

  • Automation: equipment controlled by computers for mechanical processes.

  • Mechanization: machines with human operation.

  • CAD (Computer-Aided Design): software for faster and more detailed designs.

  • CAM (Computer-Aided Manufacturing): computers monitoring and controlling machines.

  • CIM (Computer-Integrated Manufacturing): integration of CAD and CAM.

  • EPOS (Electronic Point of Sale): scanning items, updating stock at retail checkouts.

  • EFTPOS (Electronic Funds Transfer at Point of Sale): electronic payment system for card transactions.

  • Advantages of technology:

    • Increased productivity
    • Higher quality products
    • Faster communication
    • Accurate demand forecasting
    • Faster new product introductions

  • Disadvantages of technology:

    • Unemployment concerns
    • High initial setup costs
    • Rapid obsolescence
    • Employee adjustment challenges

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