Topic 10 – Production Methods
Higher Business Management
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Learning Intentions / Success Criteria
Learning
Intentions
Different
methods of
production.
Success Criteria
By end of the topic you will be able to describe and
compare:
• production methods used by large organisations
• the costs and benefits of:
- capital-intensive production
- mechanised production
- automated production
- labour-intensive production
• reasons for production choices and the effect of
that choice on efficiency.
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Methods of Production
When deciding which method of production, there are different factors
to think about:
• The actual product being made.
• The quantity of the product that needs to be made.
• The way the business will make sure the product is of a high quality.
• The way stock is managed.
• The resources available (e.g. staff and machinery).
• The method of distribution.
• The technology available.
There are three main methods of production: job, batch and flow. 3
Job Production
• Job production is when one product is made
from start to finish before another one is made.
• The product is made to the customer’s own
requirements and this results in a unique or one-
off product being made.
• Products made by job production are usually
made by hand by someone who is very skilled
at what they are doing.
Examples: wedding cakes, handmade
chocolates, pieces of art, sandwich being made
to order in a sandwich shop.
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Advantages/Disadvantages of Job
Production Advantages
• The customer gets exactly what they
want and this can increase their
satisfaction.
• High prices can often be charged
because it is a unique/one-off product.
• Designs can be changed to suit each
customer’s own requirements even
when production has begun.
• Employees experience making a range
of products using different skills.
• Employees can be motivated by seeing
the product being made from start to
finish.
Disadvantages
• Highly skilled employees are required
to make each different product and
this can be expensive (labour
intensive).
• Specialist tools and equipment might
be needed that can be expensive to
buy.
• Can’t always buy raw materials in
bulk and might miss out on cost
savings from bulk buying (economies
of scale).
• Can take a long time to make a
unique product and this might mean
the employee loses motivation.
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Batch Production
• Batch production is when one group of identical
products are made at anyone time.
• All products in the batch move onto the next
stage of production at the same time.
• Machinery and equipment can be cleaned and/or
changed between batches to produce a different
product.
• Batch production is often used when
manufacturing a product that comes in different
varieties, styles or sizes.
Examples: cakes, newspapers/magazines, bread.
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Advantages/Disadvantages of
Batch Production Advantages
• Batches can be changed to suit the
requirements of the customer which
results in higher customer satisfaction.
• Raw materials can be bought in bulk
therefore saving money.
• Cost savings can be made, as
standardised machinery is used.
• The need for highly skilled workers is
reduced.
Disadvantages
• Equipment and employees might not
have anything to do between batches,
which costs money.
• Any mistakes in one item can result in
the whole batch being wasted, which
costs money and wastes time.
• The cost of each item might be high if
the batch size is small therefore the
price charged to the customer might
be higher.
• Employee motivation can be less than
with job production, as they carry out
the same, often repetitive, task.
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Flow Production
• Flow production (sometimes
known as line production) is
when parts are added to the
product as it moves along the
production line.
• The final product will have been made by the time it reaches
the end of the production line.
• As the product moves along the production line, machinery
and workers have very specific tasks to do: one might screw
something in and one might paint a very specific part before
moving on to the next task (this is known as division of
labour).
Examples: cars/vans, computers and other electrical items. 8
Advantages/Disadvantages of Flow
Production Advantages
• Large amounts of identical
products are made.
• Raw materials can be bought in
bulk, saving the business money.
• Production often uses lots of
machinery (capital intensive) that,
compared to humans, can work
for longer and without breaks.
• Quality can be easily checked at
different stages of production.
Disadvantages
• The individual customer’s
requirements cannot be met
because each product is identical.
• If a fault occurs during production
this can cause the whole
production line to stop.
• Large demand for products is
needed because they are made in
large quantities.
• Motivation can be low among
employees due to the repetitive
nature of the work they have to do.
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Capital and Labour Intensive
The quantity of capital (machinery, equipment and technology) or
labour used in an organisation determines whether it is capital or
labour intensive.
• Automation
• Mechanisation
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Capital-intensive Production
• Products are made using
technology (machines
and equipment).
• The initial set-up of this
type of production is
very expensive.
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Advantages/Disadvantages of
Capital-intensive Production Advantages
• A large volume of identical
products can be made in this
way at a more economical
cost.
• Machinery can work 24/7 so
production can keep going
24/7.
• Machines can produce a
consistent and standardised
accuracy and quality of
work.
Disadvantages
• Individual requirements
can’t be met.
• Breakdowns can be very
costly, and idle time can be
an additional financial drain.
• Employees manning the
machines can find their job
monotonous and this can
lead to lack of motivation.
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Labour-intensive Production
• Products are made using
labour (human effort).
• Often the business is
smaller and produces
smaller quantities of
products.
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Advantages/Disadvantages of
Labour-intensive Production Advantages
• Employees can use their
own skills and initiative,
which gives them job
satisfaction.
• It is cheaper for the
organisation than buying
expensive machinery.
• Products can be tailored
to suit customer
requirement.
Disadvantages
• Wages are higher because
specialised skills are required.
• It is costly to recruit and train
employees.
• If a member of staff is absent,
production might have to wait
until they return.
• Accuracy and quality can vary
because human beings and not
machines are doing the work.
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Automated Production
Machinery has completely
replaced the need for
labour.
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Advantages/Disadvantages of
Automated Production Advantages
• Production time is quicker and
can be repeated constantly
with no errors.
• Accuracy is far greater because
there is no human error.
• There is no requirement for
workers to man the machinery,
so this saves money.
• The work environment is safer
as employees will not be in
automated work areas while
production takes place.
Disadvantages
• There is no flexibility as the
machinery can only do what it
is programmed to do.
• More machinery to complete
production means more
pollution and, in some cases,
environmentally unfriendly
fumes.
• It causes unemployment to
increase, which has an
economic impact on a country.
• Machinery breakdown are
expensive. 16
Mechanised Production
Production requires a mix
of both machinery and
labour to operate it.
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Advantages/Disadvantages of
Mechanised Production Advantages
• Standardisation can be pre-
programmed, allowing
production to be consistent.
• Machinery improves the
accuracy of work and
completes difficult tasks for
the worker.
• Using labour allows for
production issues to be flagged
up quickly.
• Labour can be trained in
becoming expert at operating
machinery.
Disadvantages
• The initial set-up costs are
high.
• Machinery could break down
and idle time is a negative
factor.
• Machinery needs to be updated
and upgraded every so often,
which can be expensive.
• Labour needs to be trained,
which is an expense. They will
probably also require training
whenever machinery is
upgraded. 18
Factors affecting Methods of
Production Factor Description
Quantity of
goods
required
If large quantities are required, flow or batch production will be
more suitable than job production.
Skills of the
workforce
If the workforce is highly skilled, their expertise would be
better suited to job production.
Cost of
labour
Rising labour costs (perhaps due to a rising minimum wage)
could mean that the business should move to capital-intensive
production.
Finance
available
Large amounts of finance are required to equip factories or hire
the number of staff needed for large-scale flow production.
Technology
available
If the business doesn’t have the technology required for capital-
intensive production, labour intensive is the only option.
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