4.1 Production of goods and services (Method of Increasing Productivity…
4.1 Production of goods and services
To produce the good or provide he service generated by the business
Production v Productivity
Measured by the amount of output (either goods or services) produced over a certain period of time
For example,Coca Cola produces 10,000 cans of coke every day in the UK.
Measured by examining the amount of output in relation to the amount of resources used to create the output
One of the most important resources that impacts productivity is labour so labour productivity and productivity are often used interchangeably.
Labour Productivity is measured by (Output/Number of employees)
Method of Increasing Productivity
Investing in more automation or new/better technology.
More efficient and quicker than humans
Improving employee motivation
Productivity will be better than they were before as the quality is improved
Improving the skills of employees
Products will be better than they were before as the quality is improved
Drawbacks of holding too much or too little stock
Holding too much
Business as to store the stock
Holding stock costs money as the business had to buy the good or raw material and has not yet earned revenue from selling to customers
Holding too little
Can't meet the demands of customers
Customer will go to a competitor who has the good or service they would like to purchase