Methods of Production Intermediate II and Higher Business Management Production Methods Agriculture tends Whilst all output can be to be very land classed as production, different production intensive – methods maycould be more efficiency be appropriate for different measured in terms products or services. of output per acre/hectare Copyright: Photolibrary Group Production Methods As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive Copyright: iStock.com Production Methods The choice of production method and the factor inputs depends on such things as: • the nature of the product • factor costs • the scale of production California Oil is Source of Wealth and Fear Copyright: iStock.com Bottle production line Copyright: Photolibrary Group Production Decisions Market size and One-Off Order? Segment Which method? Type of Product Mass Market of product? Complexity design Factor Costs – Batch? Land, Labour and Capital Methods of Production • Job Production • Batch Production • Flow Production MASS PRODUCTION IN LARGE FACTORY Production Methods • Job Production – One-off production each item might have particular specifications • Flow Production – suitable for mass market products that are identical • Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same Job Production • A house built to your own design • A custom-built boat • A piece of artwork • A hand-turned wooden bowl Job Production • Advantages:- – Customers demands can be exactly met. – A high price may be charged. – Specifications can be changed even if production has started. – Workers motivated as variety of skills required. • Disadvantages:- – Expensive due to skills required. – High R&D, transport and admin costs. – Variety of equipment and tools required. – Lengthy lead times. Batch Production • A number of similar products (repeated jobs) • The same house repeated on a building site • Bakery produce - each batch may differ slightly Batch Production • Advantages – Batches can be changed to meet specific customer requirements. – Reduced need for highly skilled staff. – Machinery can be relatively standardised. • Disadvantages – Machines/workers may sit idle between stages. – Expensive machinery may be required due to less skilled staff. – Stock levels may be high. – Staff may be less motivated due to repeating the same task in batches. – If batches are small, costs will be high. Flow Production • Mass production of almost identical products • Cars • Washing machines Flow Production • Advantages – Costs spread over a large number of goods. – Bulk discounts – Huge quantities can be produced. – Automation often used which reduces chance of human error. – Machinery can work 24/7 • Disadvantages – Huge set up costs. – Individual customer requirements cannot be met. – Equipment may be inflexible. – Worker motivation can be low because of the repetitive nature of the job. – Breakdowns can be very costly.