Y10 - Lesson Review - Operation Management

+ Learning outcomes

■ You will learn about the meaning of production:

■ Managing resources effectively to produce goods and

services

■ Difference between production and productivity

■ Benefits of increasing efficiency and how to increase it, e.g.

increasing productivity by automation and technology,
improved labour skills

■ Why businesses hold inventories (stocks)

■ Concept of lean production; how to achieve it, e.g. just-in-

time inventory control and Kaizen; benefits of lean
production

+ Managing resources effectively

to produce goods and services

■ Operations management involves managing business

resources so that it can be produced to sell to
consumers. They must:

■ Use resources in the most cost-effective way

■ Produce the required output to meet consumer demand

■ Meet the quality standard expected by consumers

+ Difference between production

and productivity

■ Productivity is a measure of the efficiency of inputs

used in the production process, especially labour and
capital

■ Labour productivity = Total output ÷ Number of

production workers

■ Production is the process of converting inputs such as

land, labour and capital into saleable goods

+ Starter – 5 minutes

■ Look at the pictures below and discuss in pairs how you think the

product or service is made.

+
4

Job production

■ Job production: Involves producing a one-off product for a specific

customer

■ e.g. cake decorating, architecture, hairdressing

■ Advantages

■ Made to customer specifications

■ High quality can be achieved

■ Workers are well motivated

■ Disadvantages

■ Usually labour intensive

■ Specialist labour is expensive

■ Relatively slow

+
5

Batch production

■ Batch production:Items are produced in groups or

‘batches’, i.e. they all undergo one operation before
moving onto the next

■ e.g. baking bread, food canning

■ A significant problem with this method is that the

production equipment must usually be stopped, re-
configured,
and its output tested
before the next batch
can be produced
(down-time)

+
6
Batch production
advantages and disadvantages

■ Advantages

■ Cost per unit is lower than ‘jobbing’

■ Several items can be produced on one production line

■ Batch size can vary to suit the order

■ Identical product produced

■ Batches can be varied to suit customer requirements

■ Disadvantages

■ Small batches increases retooling time

■ Storage costs increase – work in progress and finished goods

■ May involve repetitive jobs which can be demotivating

+
7

Flow production
(mass production)

■ Flow production:The production of large amounts

of standardised products on production lines

■ A conveyor belt is usually used to move the

products on to the next process

■ e.g. car or processed food manufacturing

+
8

Flow production
advantages and disadvantages

■ Advantages

■ Ideal for mass produced goods

■ Lowest cost

■ Cheap, low skilled labour needed

■ Disadvantages

■ Requires a huge investment in machinery

■ Products must be standardised

■ Inflexible – assembly lines can not be easily adapted for different

products

■ Repetitive tasks can be extremely demotivating for workers

■ A machine breakdown can cause production to completely cease

■ Often expensive to shut down the production line – e.g. if demand is

low

+
9

Methods of production
final thought

■ It is often difficult to classify exactly which method is used to

make a product

■ e.g. Car production involves flow production (assembly line) and batch

production (engine blocks)

+ Plenary - Final Thought

■How might 3D printing
potentially affect
manufacturing businesses in
the future?

+ Benefits of increasing efficiency and how to

increase it, e.g. increasing productivity by
automation and technology, improved labour
skills

■ To improve labour productivity you must:

■ Increase output with the same number of workers

■ Keeping output at the same level but with fewer workers

■ This can be achieved by:

■ Improving the skill level

■ Improving motivation

■ Introducing more automation and better technology

■ Improving the quality of management decisions

+

The meaning of
production

+ Learning outcomes

■ You will learn about the meaning of production:

■ Managing resources effectively to produce goods and

services

■ Difference between production and productivity

■ Benefits of increasing efficiency and how to increase it, e.g.

increasing productivity by automation and technology,
improved labour skills

■ Why businesses hold inventories (stocks)

■ Concept of lean production; how to achieve it, e.g. just-in-

time inventory control and Kaizen; benefits of lean
production

+ Managing resources effectively

to produce goods and services

■ Operations management involves managing business

resources so that it can be produced to sell to
consumers. They must:

■ Use resources in the most cost-effective way

■ Produce the required output to meet consumer demand

■ Meet the quality standard expected by consumers

+ Learning outcomes

■ You will learn about the main methods of production:

■ Features, benefits and limitations of job, batch and flow production

■ Recommend and justify an appropriate production method for a given

situation

+ Difference between production

and productivity

■ Productivity is a measure of the efficiency of inputs

used in the production process, especially labour and
capital

■ Labour productivity = Total output ÷ Number of

production workers

■ Production is the process of converting inputs such as

land, labour and capital into saleable goods

+ Benefits of increasing efficiency and how to

increase it, e.g. increasing productivity by
automation and technology, improved labour
skills

■ To improve labour productivity you must:

■ Increase output with the same number of workers

■ Keeping output at the same level but with fewer workers

■ This can be achieved by:

■ Improving the skill level

■ Improving motivation

■ Introducing more automation and better technology

■ Improving the quality of management decisions

+ Concept of lean production; how to

achieve it, e.g. just-in-time inventory
control and kaizen; benefits of lean
production
■ Lean production is the production of goods and services

with the minimum waste of resources

■ Just-in-time inventory control is when businesses don't

hold any inventories and raw materials and components
arrive from suppliers just when they are needed in the
production processes. This reduces warehousing costs but
the business must have a good relationship with the
supplier in order to achieve this

■ Kaizen is a Japanese term for 'continuous improvement'.

This is when workers suggest improvements that can be
made to speed up the production process and to
manufacture products efficiently. The changes made by
each worker is very small but these small changes can lead
to big improvements.

+ Why businesses hold inventories

■ Inventories include

■ Raw materials and components needed for production

■ Work-in-progress, which are partly finished goods that have not yet

completed the production process

■ Finished goods ready to be sold or sent out to customers

■ Costs include:

■ Warehousing costs: the business will need to rent or purchase a

warehouse to store the inventories

■ Handling costs: Inventories need to be moved out of the warehouse

■ Shrinkage costs: Damaged, lost or stolen inventories will need to be

replaced

■ Insurance costs: These will cover the cost of losses from shrinkage

■ Obsolescence: The business may not be able to sell out of date goods

■ Opportunity cost: Working capital is tied up in inventories which

could be used more profitably by the business

+ Summary of unit

1.
Businesses owned by private individuals or groups are
in the private sector.

2.
Businesses owned by the state are in the public
sector.

3.
All products go through many stages of production.

4.
The different stages of production of a product are
linked in a ‘chain of production’.

5.
Businesses may be in the primary sector, secondary
sector or tertiary sector, depending on where they
are in the chain of production.

+ Key terms

■
Hierarchy refers to the management levels within an organisation.

■
Line managers are responsible for overseeing the work of other staff.

■
Subordinates report to other staff higher up the hierarchy. Subordinates are
accountable to their line manager for their actions.

■
Authority refers to the power managers have to direct subordinates and make
decisions.

■
Delegation is when managers entrust tasks or decisions to subordinates.

■
Empowerment sees managers passing authority to make decisions down to
subordinates. Empowerment can be motivational.

■
The span of control measures the number of subordinates reporting directly to
a manager.

■
The chain of command is the path of authority along which instructions are
passed, from the CEO downwards.

■
Lines of communication are the routes messages travel along.

+

The main methods of
production

+ Learning outcomes

■ You will learn about the main methods of production:

■ Features, benefits and limitations of job, batch and flow production

■ Recommend and justify an appropriate production method for a given

situation

+ Starter – 5 minutes

■ Look at the pictures below and discuss in pairs how you think the

product or service is made.

+
4

Job production

■ Job production: Involves producing a one-off product for a specific

customer

■ e.g. cake decorating, architecture, hairdressing

■ Advantages

■ Made to customer specifications

■ High quality can be achieved

■ Workers are well motivated

■ Disadvantages

■ Usually labour intensive

■ Specialist labour is expensive

■ Relatively slow

+
5

Batch production

■ Batch production:Items are produced in groups or

‘batches’, i.e. they all undergo one operation before
moving onto the next

■ e.g. baking bread, food canning

■ A significant problem with this method is that the

production equipment must usually be stopped, re-
configured,
and its output tested
before the next batch
can be produced
(down-time)

+
6
Batch production
advantages and disadvantages

■ Advantages

■ Cost per unit is lower than ‘jobbing’

■ Several items can be produced on one production line

■ Batch size can vary to suit the order

■ Identical product produced

■ Batches can be varied to suit customer requirements

■ Disadvantages

■ Small batches increases retooling time

■ Storage costs increase – work in progress and finished goods

■ May involve repetitive jobs which can be demotivating

+
7

Flow production
(mass production)

■ Flow production:The production of large amounts

of standardised products on production lines

■ A conveyor belt is usually used to move the

products on to the next process

■ e.g. car or processed food manufacturing

+
8

Flow production
advantages and disadvantages

■ Advantages

■ Ideal for mass produced goods

■ Lowest cost

■ Cheap, low skilled labour needed

■ Disadvantages

■ Requires a huge investment in machinery

■ Products must be standardised

■ Inflexible – assembly lines can not be easily adapted for different

products

■ Repetitive tasks can be extremely demotivating for workers

■ A machine breakdown can cause production to completely cease

■ Often expensive to shut down the production line – e.g. if demand is

low

+
9

Methods of production
final thought

■ It is often difficult to classify exactly which method is used to

make a product

■ e.g. Car production involves flow production (assembly line) and batch

production (engine blocks)

+

How technology has
changed production
methods, e.g. using
computers in
manufacturing and
design

+ Learning outcomes

■ You will learn about how technology has changed

production methods, e.g. using computers in
manufacturing and design

+ Starter – 10 minutes

■ On your own close your eyes, and consider what the world

might look like today if we had no computers or machines
– 2 mins

■ Discuss what you considered with the person next to you –

3 mins

■ Feedback - 5mins

■ What products or services would even exist?

+Research Task 15 - mins

•
Divide up into:

1.
Primary Sector

2.
Secondary Sector

3.
Tertiary Sector

Each group create a google doc and research the types of technology currently
used in each sector. Use the Table headings:

> Name of Technology

> Why is it used

> Will it be used in the future

+ TECHNOLOGY AND

MANUFACTURING

■ Labour is expensive to employ

■ Firms try to replace labour with machines

to save money

■ MECHANISATION – is when machinery is

used but labour is still required in order to
work the machine e.g farm work

■ AUTOMATION – is when a computer is

used and a computer controls it. Workers
onky employed to programme and
supervise machinery

+ TYPES OF TECHNOLOGY

■ Computer-aided manufacturing (CAM) is when

the machines used to make the product are
controlled by computer.

■ This reduces labour costs, is more accurate and

faster and can work at any hour of the day.

■Computer-integrated manufacturing (CIM) is

when computers control the whole production
line

■ e.g. car production where robots undertake

much of the work, reducing the need for
labour to perform boring, routine tasks.

+ Computer-aided design (CAD)

■Computer-aided design (CAD) Computers

are used to help design products using
computer generated models and 3D
drawings.

■ Reduces the need to build physical models

to test certain conditions, known as
prototypes.

■ This can be expensive to produce just for

testing purposesM (e.g. aircraft or new
cars.

+ ADVANTAGES OF

TECHNOLOGY IN
PRODUCTION
■ Large amounts can be made → economies

of scale, meaning unit costs of production
fall

■ Productivity of workers improves. The

output per worker increases and so labour
costs fall for each product made

■ Quality of production can be improved

because machines are less likely to make
mistakes → reduce wastage → save money.
Improved quality may attract new
customers

+

■ Production can be flexible. Machines can be

programmed to produce variety of products in order
to meet needs of individual cistomers

■ Repetitive or dangerous jobs may be done by machines

rather than people

+ PROBLEMS OF

TECHNOLOGY

■ When firm introduces new technology it may need to

make workers redundant.

■ Costs of making workers redundant may be high

■ May be problems with trade unions as they may take

industrial action against the redundancies

+

■ Firm may need to recruit new employees with skills to use

new technology

■ These workers likely to be in high demand and will be paid

high salaries

■ Existing employees may need re-training to work new

machines

■ Buying and installing machines can be very expensive. A

firm risks a lot of money when it introduces new technology.

+ Plenary - Final Thought

■How might 3D printing
potentially affect
manufacturing businesses in
the future?