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Production of Goods and Services (How Technology has changed production…
Production of Goods and Services
Operations Department
Factory Manager
Responsible for
Quantity
and
Quality
of product
Maintenence
Purchasing Manager
Materials
Components
Equipments
Research and Development Manager
Design
Testing
In a service business, managers may be present in every outlet (e.g.
Restaurant Managers
)
Productivity
Formulas
Productivity= Quantity of Output : Quantity of Input
Labour productivity= Output (In a given time) : No. of employees
Increase Productivity
Improving layout of machinery
Improving labour skills
Use
automation
(Machines)
Discipline workers to prevent low quality output
Benefits of Increasing Productivity
Increased outputs
Lower costs
Less labour required
Higher wages
Why Businesses Hold Inventory
To ensure there is always
enough inventory
to
satisfy demand
Reorder point
- level of inventory which triggers an action to replenish that particular inventory stock
Lean Production
Types of
Waste
Overproduction
Waiting
Transportation
Unnecessary Inventory
Motion
Over-processing
Defects
Benefits
Less storage of raw materials or components
Quicker production
No need to repair defects
Better use of equipment
Improved health and safety
Cutting out processes
increases production speed
Quality
is maintained
Types of
Lean Production
Kaizen
Increased productivity
Reduced amount of space needed
Work-in-progress is reduced
Improved layout of the factory may allow jobs to be combined, thereby freeing employees to work out other jobs in the factory
Cell Production
Employees have higher morale
Employees are less likely to strike or cause disruption
Just-In-Time Inventory Control
Reduces cost of holding inventory
Warehouse space not needed
Faster cash flow
Methods of Production
Job Production
Advantages
Suitable for personal services 'one-off'
Meets exact requirements of customer
Workers have varied jobs
Varied work increases employee motivation
Public Diagram
Disadvantages
Skilled labour is used
Higher costs
Production takes long time
Errors are expensive to correct
Expensive materials
Batch production
Advantages
Flexible way of working and production can easily be changed from one product to another
It still gives some variety to workers' jobs
More variety to products
Production is not extremely reliant on machinery
Disadvantages
Expensive transportation costs
Delay in production caused by reset of machine
Warehouse space is needed
Flow production
Advantages
High output
Low costs, low prices
Machines can easily be used, increasing efficiency
May benefit from economies of scale
Low prices means high sales
Goods are produced cheaply and quickly
Transportation time is saved
Can operate 24 hours a day
Unskilled workers can be used
Disadvantages
Very boring for workers
Significant storing requirements
High capital costs of setting up the production line
If one machine breaks down, the whole production must be halted
Factors Affecting Which Method of Production Is Used
Nature of the product
The size of the market
The nature of demand
The size of the business
How Technology has changed production methods
Automation
Mechanisation
CAD (Computer Aided Design)
CAM (Computer Aided Manufacture)
CIM (Computer Integrated Manufacturing)
EPOS (Electronic Point of Sale)
EFTPOS (Electronic Funds Transfer Point of Sale)
Advantages
Greater Productivity
Greater
Job Satisfaction
Training is offered, workers are motivated
Better quality
products
More accurate
customer demand reports
Quicker communication and reduced paperwork
Better and Quicker decision making
New products are introduced as new methods of production are introduced
Disadvantages
Unemployment rises
Expensive to invest in
Employees are unhappy as they feel they are being replaced
New technology is changing all the time and will often become outdated quite quickly and need to be replaced if the business is to remain competitive