5.2 — Operations Methods

Question 1

Define operations methods

Answer 1

• different ways a business organises + carrier out the production of goods (or delivery of services)
• depends on cost / scale / flexibility / demand

Question 2

What are the 4 operations methods?

Answer 2

1. Job production
2. Batch production
3. Mass (flow) production
4. Mass customisation

Question 3

What is job production?

Answer 3

• method of production that is labour-intensive
• produces costumised / one-off products tailored to each costumer
• relies on skilled workers
• more expensive because of customisation and lack of economies of scale

Question 4

State key characteristics of job production:

Answer 4

• very flexible production
• labour-intensive
• highly skilled workers
• low output volume
• highly customised
• production often begins after an order is received

Question 5

State 3 advantages and 4 disadvantages of job production

Answer 5

Advantages:
- very flexible (fully tailored to costumer needs)
- premium prices can be charged = higher profit margins
- higher worker motivation (non-repetitive + creative + skilled tasks)

Disadvantages:
- high labour costs (requires skilled employees)
- no economies of scale (high average costs)
- long production time per unit
- output limited —> total revenue may be low

Question 6

Define batch production

Answer 6

• capital-intensive method of production
• groups (batches) of identical products are made together
• production switched to a new batch only after current one is completed (not a continuously nor individually)

Question 7

Key characteristics of batch production

Answer 7

• non-continuous —> batches produced at intervals
• batches move from stage to stage of production together
• limited quantity produced according to specific specifications
• capital-intensive

Question 8

State 2 advantages and 3 disadvantages of batch production

Answer 8

Advantages:
- economies of scale —> lower unit costs
- It offers flexibility (allows manufacturers to change product types between batches)
—> this product variety spreads risk over different products

Disadvantages:
- less customisation than job production
- high capital cost for machinery + equipment
- inactive time in machinery changeovers = productivity loss

Question 9

Define mass produciotn

Answer 9

• capital-intensive & automated method of production
• large quantities of standardised products are produced continuously on an assembly line
• focuses on maximising output
• workers require less specialised skills

Question 10

Key characteristics mass flow production

Answer 10

• high output
• capital-intensive
• low-skilled labour
• standardised (identical) products
• uses continuous flow and automation

Question 11

State 5 advantages and 4 disadvantages of mass (flow) production

Answer 11

Advantages:
- economies of scale = low unit costs
- continuous + fast production
- lower labour costs / unit
- easier to increase production if demand rises
- costumer benefit from lower prices

Disadvantages:
- high start-up costs
- no flexibility in product design
- stockholding cots very high
- low motivation workers due to repetitive tasks

Question 12

What is mass customisation?

Answer 12

Method of production that combines low-cost advantages of mass production with the flexibility of job production
—> allowing costumers to personalise standard products

Question 13

Characteristics mass customisation

Answer 13

• offers customised features (costumer co-design)
• medium-to-high prices
• direct to costumer model (sent after made, doesn’t hold inventory)

Question 14

3 advantages and 2 disadvantages of mass customisation

Answer 14

Advantages:
- differentiation = competitive advantage
- higher profit margins than normal mass production
- greater brand loyalty + satisfaction

Disadvantages:
- high investment in tech + systems
- more expensive production costs (can lower profitability if costs too high)

Question 15

What must mass customisation fulfill to be profitable

Answer 15

High demand AND highly efficient systems