Methods of Production
- Job production is making a tailor-made product to suit an individual customers needs
- Flow production is the continuous production of a single item
- Batch production is producing a set number of identical items
- Cell production is using production line technology to produce a range of products flexibly
Production and Productivity
- Production is the total output produced in a period of time, while productivity measures output per unit of input
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Productivity is important to a firm because it can:
- Reduce cost per unit of output and improve competitiveness, which allows either reduction in price or increased profit margin
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Factors affecting productivity include:
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Investment in capital equipment and improving the production process
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Training in order to improve the skills and abilities of the workforce
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Motivation through factors such as job enrichment
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- Efficiency is about making the best possible use of resources, which can be achieved by minimising waste, making use of the most effective technology, and getting the balance right between the different factors of production
- Efficiency will be achieved where average costs are minimised
Labour vs Capital Intensive production
- Labour intensive production uses a higher proportion of labour relative to capital, which allows greater flexibility in response to customer requirements and cheaper start up costs
- Capital intensive production uses a higher proportion of machinery relative to labour, which allows for increased productivity, and cost savings can be made in higher volumes
The infographic at the top of the page can be downloaded here:
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