Business SL

IB Business Management: Production Methods SOLUTIONS/ANSWERS

According to production methods, identify each of them followed by the example and distinguish the disadvantages and advantages.

Type Example Advantage Disadvantage
Job (customized) production Custom made medals that have different designs, names, colors, size, etc. ·         Clients get exactly what they ordered

·         Flexible

·         Motivate skilled workers

·         High mark-up

·         Expensive

·         Requires skilled workers

·         Labour intensive

·         Time consuming (consultations)

·         Has a chance of failure

Batch production iPhones that have different storage sizes (16GB, 64GB etc.) ·         Benefited by economies of scale

·         Captures more market share

·         Can be used to trial products

·         Deal with unexpected orders

·         Experience down time (machines may need to be calibrated)

·         Hold large stocks of work

·         Batch size depends on machinery capacity

Mass production iPhone chargers are exactly the same (standard design) for all the current generation of devices. ·         Needs little maintenance

·         Able to cater large orders

·         Benefits from larger economies of scale

·         Automated process means lower labor needs & costs

·         Can response to increase in orders quickly (process set up already)

·         High set-up costs

·         Breakdowns costs the business a lot (also causes assembly to stop)

·         Depends on steady demand from market

·         Inflexible system

·         Process can be tedious for workers

Cellular production ·         Increased worker commitment and motivation

·         Job rotation within cells

·         Increased productivity

·         Improves quality

·         Reduce cost of production

·         Expensive and time consuming to train workers

·         Workers need to be flexible

 

 

Recommend which method of production, job or batch, should be used when making bikes to order. Give reason for your recommendation.

Job or customized production is a special “one-off” product that takes place when a product is made to a specific order by an individual customer. Job production is best done when a customer chooses to order and customize their own bike by using their own design. The advantage of this is that the bike ordered will be made to match the needs and the requirements from the individual customer since the product is personalized and so the quality will be high. The disadvantage would be how the costs will be relatively higher compared to the rest of the options and how it would be more time consuming. Nevertheless, since the product is what the customer essentially orders, then I would recommend Job production.

Recommend which method of production, job or batch, should be used when making standards design mountain biking.  Give reason for your recommendation.

Batch production is done when a group of identical products is made in production before the it is switched to produce a different product. Since the company wants to make a standard design for mountain biking, then batch production would be the perfect fit since this type of production is cheaper and quicker than job production. This is why the batch production method is best for the company to produce the standard design mountain bikes.

Evaluate the possible costs and benefits to Holden’s Cycles Ltd of equipping a new factory with new production technology.

With new production technology, the business may benefit from the decreased production costs. New technology would mean that the business would be more efficient and may need to employ less people if the machinery is efficient enough. Overall, new machinery would mean that the firm could sell more products with cheaper prices or instead selling bikes with higher margins. However, the business needs to consider how introducing the new technology may be expensive for the business. The firm would need to spend a lot of the business’ capital or even take out a loan to purchase the machinery needed. If the company chooses to take out a loan, then the business will need to pay interests and would need to spend more money in the end.

Define: flow production

Production method where items are constantly in a moving process moving from stage to stage of each production process until it is ready. This system allows a large quantity of output in a short period of time.

Define: job rotation

Workers are divided into groups who swap tasks. By doing this, employees can increase motivation because it makes the job not tedious and boring. A disadvantage is that it may be costly for the business to do so and the business will need to train the workers to work different jobs.

Analyze two disadvantages BMW may have encountered using flow production.

First is that the workers or employees might get bored of the flow production. This is because the work done by the employees are tedious. This could then result in a high staff turnover if the workers or employees decide to leave the business because of the repetitive work done with this method of production.

Explain the characteristic of cell production.

Cell production is when a flow production method is then divided into groups or teams working at different stages. Cell production will allow the workers more responsibility and less boredom since they work in teams. Also since it is divided into teams, job rotation is now unlocked to be used.

Evaluate the decision of BMW of switching its production of the mini from flow production to cell production.

If BMW decides to switch into cell production, the company will benefit from a better morale with the workers because of increased social interactions between the workers. This method also empowers the important people and gives them responsibility. This can be motivating the employees to work better and do better production decisions because they will care more about their reputation. In turn what will happen is that staff turnover rates will fall down because the workers feel more respected and feel like they have a responsibility in the company. In the end, cell production can help with businesses have a greater competitive advantage which are improving quality, increasing productivity, and reducing the costs of production. However, cell production could backfire on the company for the same reasons. Increased social interactions could result in distracting work and cause productivity to slow down. Also to switch to cell production means that the firm will need to spend more money to train employees which is time consuming and costly.

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