Methods of Production Intermediate II and Higher Business Management

Production Methods Copyright: Photolibrary Group Whilst all output can be classed as production, different production methods may be more appropriate for different products or services. Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare

Production Methods Copyright: iStock.com As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive

Production Methods California Oil is Source of Wealth and Fear Copyright: iStock.com Bottle production line Copyright: Photolibrary Group The choice of production method and the factor inputs depends on such things as: the nature of the product factor costs the scale of production

Production Decisions Which method? Type of Product One-Off Order? Mass Market product? Batch? Market size and Segment Factor Costs – Land, Labour and Capital Complexity of design

Methods of Production Job Production Batch Production Flow Production MASS PRODUCTION IN LARGE FACTORY

Production Methods Job Production – One-off production - each item might have particular specifications Flow Production – suitable for mass market products that are identical Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same

Job Production A house built to your own design A custom-built boat A piece of artwork A hand-turned wooden bowl

Job Production Advantages:- –Customers demands can be exactly met. –A high price may be charged. –Specifications can be changed even if production has started. –Workers motivated as variety of skills required. Disadvantages:- –Expensive due to skills required. –High R&D, transport and admin costs. –Variety of equipment and tools required. –Lengthy lead times.

Batch Production A number of similar products (repeated jobs) The same house repeated on a building site Bakery produce - each batch may differ slightly

Batch Production Advantages –Batches can be changed to meet specific customer requirements. –Reduced need for highly skilled staff. –Machinery can be relatively standardised. Disadvantages –Machines/workers may sit idle between stages. –Expensive machinery may be required due to less skilled staff. –Stock levels may be high. –Staff may be less motivated due to repeating the same task in batches. –If batches are small, costs will be high.

Flow Production Mass production of almost identical products Cars Washing machines

Flow Production Advantages –Costs spread over a large number of goods. –Bulk discounts –Huge quantities can be produced. –Automation often used which reduces chance of human error. –Machinery can work 24/7 Disadvantages –Huge set up costs. –Individual customer requirements cannot be met. –Equipment may be inflexible. –Worker motivation can be low because of the repetitive nature of the job. –Breakdowns can be very costly.