Production of goods and services

Production

• Production is the provision of a product of to satisfy consumer wants and needs. 
• Adds value to raw materials and components
• A competitive business should combine factors of production efficiently in the right proportions

Operations department 

• The role of the operations department in a business is to take inputs and change them into outputs for customer use.
• The operations manager is responsible for making sure raw materials are provided and made into finished goods. 

1. A factory manager
2. A purchasing manager
3. A research & development manager 

Productivity is the output measured against the inputs used to create it. 

Productivity = Output / Quantity of input 

Labor productivity = Output / Number of employees

How to improve efficiency and productivity:

1. Improve the quality of product and inventory control to reduce waste
2. Replace employees with machines
3. Improve training to increase employee efficiency 
4. Introduce new technology 

Benefits of efficiency and productivity:

1. Reduced inputs needed for the same level of output
2. Lower costs per unit
3. Fewer workers may be needed, may lead to lower wage bills
4. Higher wages might now be paid to workers, which increases motivations

Inventory 

The buffer inventory level is the inventory held to deal with uncertainty in customer demand deliveries of supplies. 

Lean Production

Lean production is a term for those techniques used by businesses to cut down on waste and therefore increase efficiency. 

Wastes that can occur:

1. Overproduction
2. Waiting
3. Transportation 
4. Unnecessary inventory 
5. Motion
6. Over-processing
7. Defects

Benefits of lean production

Costs are saved, THROUGH:

1. Less storage of raw materials and components
2. Quicker production 
3. No need to repair defects
4. Better use of equipment 
5. Cutting out some processes
6. Less money tied up in inventories
7. Improved health and safety of workers

Kaizen

Kaizen is a Japanese term meaning continuous improvement through the elimination of waste. 

Advantages of Kaizen:

1. Increased productivity 
2. Reduced amount of space needed for production
3. Work-in-progress is reduced
4. Improved layout of the factory floor may allow some jobs to be combined.

Just in time inventory control

Just in time is a production method that involves reducing or virtually eliminating the need to hold inventories of ray materials or unsold inventories of the finished product.

• This reduces the costs of holding inventory
• The finished product is sold more quickly, so cash inflow is faster

Cell production 

Cell production is where the production line is divided into separate, self-contained units, each making an identifiable part of the finished product. 

• Better morale for workers 

Methods of Production

Factors affecting which method of production to use:

1. Nature of the product
2. Size of the market
3. Nature of demand
4. The size of the business

How technology has changed production

1. Automation
2. Mechanisation– production done by machines but operated by workers
3. CAD (computer-aided design)- allows items to be designed online and be tested rather than drawing
4. CAM (computer-aided manufacture)- computers monitoring the production process

CIM (computer integrated manufacturing)– total integration of CAD and CAM