Chapter 4

Question 1

What is production?

Answer 1

Production is the process of making goods or services to satisfy consumer wants and needs.

Question 2

What are the four factors of production?

Answer 2

Land, Labour, Capital, and Enterprise.

Question 3

What is productivity?

Answer 3

Productivity is a measure of efficiency, calculated as output divided by input (e.g., output per worker).

Question 4

What is labour-intensive production?

Answer 4

Production that uses more human workers than machines.

Question 5

What is capital-intensive production?

Answer 5

Production that uses more machines and technology than human workers.

Question 6

What is lean production?

Answer 6

Techniques used to cut down waste and raise efficiency in production.

Question 7

Name three types of waste lean production aims to reduce.

Answer 7

Transportation, overproduction, waiting, motion, unnecessary inventory, over-processing, defects.

Question 8

What is Kaizen?

Answer 8

Kaizen is a Japanese term meaning continuous improvement, focusing on small, frequent changes to improve efficiency.

Question 9

What is Just-in-Time (JIT) inventory?

Answer 9

A system where inventory arrives exactly when needed in the production process, reducing storage costs.

Question 10

What is cell production?

Answer 10

Dividing production into separate units (cells), each responsible for a part of the product, to improve motivation and efficiency.

Question 11

What are the three main methods of production?

Answer 11

Job production, batch production, and flow (mass) production.

Question 12

What is job production?

Answer 12

Producing one product at a time, often custom-made to order.

Question 13

What is batch production?

Answer 13

Producing a group (batch) of similar products together before switching to another batch.

Question 14

What is flow (mass) production?

Answer 14

Producing large quantities of identical products in a continuous process.

Question 15

What is automation?

Answer 15

Using machines controlled by computers to perform production tasks with minimal human intervention.

Question 16

What is Computer-Aided Design (CAD)?

Answer 16

Software used to design products and create detailed technical drawings.

Question 17

What is Computer-Aided Manufacture (CAM)?

Answer 17

Using computers to control and monitor production equipment.

Question 18

What are fixed (overhead) costs?

Answer 18

Costs that do not change with the level of output, such as rent and management salaries.

Question 19

What are variable costs?

Answer 19

Costs that vary directly with the level of output, such as raw materials and direct labor.

Question 20

What is break-even point?

Answer 20

The level of sales at which total revenue equals total costs, resulting in no profit or loss.

Question 21

What is quality control?

Answer 21

Checking products for faults or errors at the end of the production process.

Question 22

What is quality assurance?

Answer 22

Ensuring quality standards are met throughout the production process, not just at the end.

Question 23

What is Total Quality Management (TQM)?

Answer 23

A system of continuous improvement where quality is the responsibility of everyone in the organization.

Question 24

Name three factors influencing the location of a manufacturing business.

Answer 24

Proximity to raw materials, availability of labor, access to markets, transport and communication, government influence, climate.

Question 25

What is meant by economies of scale?

Answer 25

Cost advantages gained by increasing the scale of production, leading to lower average costs per unit.

Question 26

What are diseconomies of scale?

Answer 26

Increases in average costs as a business grows too large, often due to communication problems, low morale, or slow decision-making.

Question 28

What is the role of the operations department in a business?

Answer 28

To take inputs (resources) and transform them into outputs (finished goods or services) for consumers.

Question 29

Who is responsible for ensuring raw materials are available and made into finished goods?

Answer 29

The operations manager.

Question 30

What is meant by ‘inputs’ in production?

Answer 30

The economic resources or factors of production (land, labour, capital, enterprise) used to produce goods or services.

Question 31

What is meant by ‘outputs’ in production?

Answer 31

The finished goods or services produced by combining inputs.

Question 32

What is the formula for labour productivity?

Answer 32

Labour productivity = Output / Number of employees.

Question 33

What is meant by ‘inventory’ in operations management?

Answer 33

Inventory refers to raw materials, work in progress, and finished goods held by a business.

Question 34

Why must inventory levels be controlled?

Answer 34

To ensure enough inventory is available to meet demand without incurring high storage or opportunity costs.

Question 35

What is overproduction and why is it a waste?

Answer 35

Overproduction is making more products than needed, leading to high storage costs and possible damage to goods.

Question 36

What is meant by ‘motion’ as a type of waste in lean production?

Answer 36

Any unnecessary movement by employees that does not add value to production.

Question 37

What is meant by ‘defects’ as a type of waste in lean production?

Answer 37

Faulty goods that require inspection, rework, or fixing, wasting time and resources.

Question 38

What is the main benefit of Kaizen (continuous improvement)?

Answer 38

It increases productivity, reduces space needed, and lowers work in progress inventory.

Question 39

What is a drawback of Just-in-Time (JIT) inventory systems?

Answer 39

Businesses must have reliable suppliers and efficient ordering systems, or production may be disrupted.

Question 40

What is the main advantage of cell production?

Answer 40

It increases motivation and efficiency by giving teams responsibility for a part of the production process.

Question 41

What is mechanization?

Answer 41

Production done by machines operated by people, often for difficult, precise, or dangerous tasks.

Question 42

What is Computer Integrated Manufacturing (CIM)?

Answer 42

The integration of Computer-Aided Design (CAD) and Computer-Aided Manufacture (CAM) so that design and production are linked.

Question 43

What is EPOS (Electronic Point of Sale)?

Answer 43

A system used at checkouts where barcodes are scanned, updating inventory and sales records automatically.

Question 44

What is EFTPOS (Electronic Funds Transfer Point of Sale)?

Answer 44

An electronic cash register system that transfers money directly from the shopper’s bank account to the retailer.

Question 45

What is the formula for average cost (unit cost)?

Answer 45

Average cost = Total cost / Total output.

Question 46

What are purchasing economies of scale?

Answer 46

Cost savings gained by buying in bulk, leading to discounts and lower unit costs.

Question 47

What are managerial economies of scale?

Answer 47

Cost savings from employing specialist managers who improve efficiency and reduce waste.

Question 48

What is the ‘safety margin’ in break-even analysis?

Answer 48

The amount by which actual sales exceed the break-even level of output.

Question 49

What is a limitation of break-even charts?

Answer 49

They assume all products made are sold and that costs and revenues increase at a constant rate.

Question 50

What is the main aim of quality assurance?

Answer 50

To prevent faults by maintaining quality standards throughout the production process.

Question 51

What is a drawback of Total Quality Management (TQM)?

Answer 51

It is expensive to train employees and relies on everyone following the quality ideology.