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5.4 location5.5 production planning - Coggle Diagram
5.4 location5.5 production planning
the reasons for a specific location of production
to access cheaper and/or better quality resources such as land,labour or raw materials
to be close to customers
to avoid trade protectionist policies
to benefit from the local infrastructure ex: transportation and communications network
ways of reorganizing production nationally and internationally
outsorcing
is the practice of subcontracting non-core activities of an organization to a third party provider (cleaners, security firms)
offshoring
is the practice of relocating part or all the firtm's business functions and processes overseas
insourcing
opposite of outsorcing is the use of a firm's own resources to fulfill a certain role, function or task
the supply chain process
is the process of overseeing the logistics from the manufacturing stage to the finished product being delivered to the consumer
a long supply chain and/or ineffective supply chain management can be costly as it increases of things going wrong in a business
difference between just in time (JIT) and just in case (JIC)
JIT
is a stock control system that avoids the use of holding stocks, they are supplied only when needed
ADVANTAGES: no need of buffer stocks, JIT fosters lean production and productive efficiency
DISADVANTAGES: complete reliance on third party suppliers, admin. and implementation are high, inability to meet unexpected changes in demand
JIC
si a stock control system that relies on having spare stock in case there's a sudden increase of demand
ADVANTAGES: flexibility to meet a unexpected rise in consumer demand, it enables production to continue if there's a delay in deliveries from suppliers, prevents loss of potential customers
DISADVANTAGES: suppliers can charge premium prices for urgent deliveries, higher costs (storage,maintenance), risk of obsolete and unsold products
productivity rate
productivity is a measure of the efficiency of prodcution,
labour productivity
is a measure of the eficiency of workers in an organization
total output per period (units)/number of employees at work
capacity utilization rate
expresses a firm's actual output as a percentage of its maximum portential output, at a particular point of time
actual output per period/full capacity output per period *100
cost to buy (CTB) cost to make (CTM)
is a management decision which involves choosing whether to manufacture a product (make) or purchase it (buy)
CTB = price*quality
CTM = FC-VC