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.