Page 212 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 4 Operations management

The main features of flow production are:

■ large quantities are produced
■ standardised products
■ workers are relatively unskilled
■ high degree of automation
■ large inventories of raw materials and work in progress.

Each of these methods has its benefits and limitations – see Table 15.1.

Method of Benefits Limitations
production

Job ■ Unique, high quality products ■ Uses skilled labour rather
are made. than machinery, so selling
■ Workers are oft en more prices are usually higher.
motivated and take pride in ■ Production can take a long
their work. time and can be expensive, for
instance if special materials or
tools are required.
■ Economies of scale are not
possible, often resulting in a

more expensive product.
Batch ■ Since larger numbers are ■ Workers are oft en less
made, unit costs are lower. motivated because the work
KEY TERM
■ Offers the customer some becomes repetitive.

210 variety and choice. ■ Goods have to be stored
Capital intensive: production
■ Materials can be bought in until they are sold, which is
process uses a high quantity of
bulk, so they are cheaper. expensive.
capital equipment compared with
labour input. Flow ■ More capital intensive ■ Requires very large capital
than job or batch production, investment in production line
which lowers the labour cost. technology.
■ Materials can be purchased in ■ Workers are not very
EXPLORE!
large quantities, so they are motivated, since their work is
often cheaper due to bulk- very repetitive.

Find a member of your family,
buying economies of scale. ■ It is not a very flexible method
a friend or a neighbour who
■ Large number of goods are as production lines are
works for a business involved
produced. difficult to change.

in manufacturing. Ask them to
■ If one part of the production
explain how the product(s) are
line breaks down, the whole
produced. Is it batch or flow
production process will have
production? What is their role
to stop until it is repaired.
in the process? Do workers ■ High levels of raw material,
specialise in one task, or do they work in progress and finished
do a variety of tasks. Ask them goods inventories are held.
if they enjoy their work – if they This increases business costs.
do – why? If not, why not? Does
the production process use more Table 15.1 Benefits and limitations of job, batch and flow production
workers than machines? Are
workers paid piece-rate, hourly
Choosing the method of production
rate and do they receive a bonus?
Firms choose their method of production based on a number of factors, such as:
■ the amounts they are likely to sell
■ the product they are making
■ the costs of production
■ the variety of goods expected by customers.