Unit 5 Operations Management Production Methods

Learning Objectives To describe and compare the features and applications of job, batch, line, flow and mass production

Production Process Explained A firm must purchase all the necessary inputs and then transform them into the product (outputs) that it wishes to sell How well organised a firm is at undertaking this transformation process will determine its success. This is known as the productive efficiency of a firm and it will want to be as efficient as possible in transforming its inputs into outputs Ultimately, the objective of the production process is to create goods and services that meet the needs and wants of customers. The needs and wants of customers will be met if a business can produce the correct number of products, in the shortest possible time, to the best quality and all at a competitive price

Main inputs into production ‘Factors of production’ Land & raw materials Labour – workforce Capital – machines and equipment Enterprise – ideas, organisation and willingness to take a risk over a product

Things to consider when producing goods The cost of production The quality required The quantity needed What customers want

Main types of production Job production Batch production Flow production Mass production (Mass customisation) Cell production (HL ONLY)

Job Production One-off or small number of items produced Normally made to customers specifications (e.g. wedding cake or building project) Often undertaken by small, specialist businesses Examples: – Architects – Plumbers – Ship builders – Road builders

Advantages & disadvantages of job production Advantages Products are usually high quality Products are made to measure Workers gain more satisfaction from seeing the finished product Workers are well motivated & take pride in their work Disadvantages High cost of production Skilled labour is more expensive, but is required to carry out the task Selling prices are higher because it is labour intensive Goods take a long time to make and it is difficult to speed up production

Batch Production What is involved – Similar items are produced together – Each batch goes through one stage of production process before moving onto next stage – Example: a furniture factory that makes 20 chairs, then 10 bookcases, and then 15 dining tables Aims – Concentrate skills, workers each specialise in one job – Achieve better use of equipment and so produce good quality products more economically than manufacturing them individually

Advantages & disadvantages of batch production Advantages Customers different demands can be met As goods are made for a specific customer, the cost of storing finished goods will be reduced Use of specialist machines and automation reduce costs Disadvantages It takes time to switch machinery from one setting to another - this increases costs Components for different jobs may need to be stored – this increases costs Tasks may be repetitive and boring, demotivating workforce

Flow Production What it involves – Producing large numbers of goods continuously – Product moves continuously through production process – Usually on a conveyor belt. Called line production – When one task is finished next task must start immediately – High level of automation & little manpower. This is called capital intensive – Examples – Cars, Computers, chocolates

Advantages & disadvantages of flow production Advantages Large amounts can be made Economies of large-scale production = lower unit cost Machinery & automation can be used Improved use of technology has allowed variations in designs to be pre-programmed into machines Continuous, often 24-hour production is possible Disadvantages May not be high quality Expensive to set up Stock costs may be high as a lot of parts may have to be stocked to keep production going A problem at any point on the production line may cause a total shut down Jobs may be repetitive and boring causing demotivation amongst workforce

Mass Production What it involves – Large scale production where a business produces large numbers of same item – Little, if any, “customisation” of product Typical features – A standard product (little or no variation in style or quality) – Using standard parts – Built using standard equipment e.g. washing machines

How to deicide which method to chose This depends on a number of factors – The amount likely to be sold – The nature of the product to be made – What the costs will be – The variety of goods expected by the customer

Production and Seasonal Demand Changes in seasonal demand can mean a requirement for: – Lots of stock at particular times of year & little demand at other times – E.g. demand for children’s toys is heavily-focused on pre- Christmas period Implications for producers – May make sense to “build for stock” during periods of quiet demand – Make use of production equipment that would otherwise lie idle Produce of perishable products – Here, production process needs to be designed flexibly – Additional production capacity can be added when close to time when demand increases (e.g. bring in more part-time, temporary employees)

Task For each of the following products decide which would be the most appropriate method of production. Explain your reasons in each answer – Tubs of different types of ice-cream – Tins of baked beans – Dental care – Pairs of trainers – Baking loaves of bread – A jeweller making an exclusive tiara

Cell Production What it involves – Splitting flow production into self contained groups that are responsible for whole work units – A form of flow production – Every cell has a team leader Typical features – A standard product (little or no variation in style or quality) – Using standard parts – Built using standard equipment e.g. washing machine

Task - Video case smart production