Business igcse (0450) page 563 to 600
Section 4 Operations management
Part 18 Production of goods and services
Managing resources effectively
Þ Production is the manufacturing of a product or a service
to satisfy consumer wants and needs.
Þ Adds value to the raw materials and bought-in
components.
Þ By adding value, businesses combine the inputs to
produce more valuable outputs
Þ The factors of production, inputs, can be combined in
different proportions
Land
Inputs Labour
(Economic Production Outputs
resources) Process
Enterprise
Goods Services
Capital
Þ For a business to be competitive it should combine these
inputs efficiently so it makes the best use of its resources
Operations Department
Þ Role it to take inputs and change them into outputs for
customer use
, Þ Operations manager is responsible for making sure that
raw materials are provided and made into finished goods
and services
Þ A typical manufacturing business will have:
Þ a Factory Manager who will be responsible for the quantity
and quality of products coming off a production line
Þ a Purchasing Manager will be responsible for providing
the materials, components and equipment required for the
production
Þ a Research and Development Manager will be responsible
for the design and testing of new production processes
and products.
Productivity
Þ the level of production is the total output of a business in a
given time period- different to productivity
Þ Productivity is how business can measure its efficiency
Productivity = output
Quantity of input
Þ Businesses often want to measure the productivity of one
of the factors of production or inputs. This is measured by
dividing the output over a given period of time by the
number of employees
Labour Productivity = output
Number of employees
Increasing productivity
Þ Can be raised by either using fewer inputs to produce the
same output or using the same inputs to produce a higher
level of output
Þ Improve quality of the product and inventory control to
reduce waste
Þ Replace employees with machines
Þ Improve training to increase employee efficiency
Section 4 Operations management
Part 18 Production of goods and services
Managing resources effectively
Þ Production is the manufacturing of a product or a service
to satisfy consumer wants and needs.
Þ Adds value to the raw materials and bought-in
components.
Þ By adding value, businesses combine the inputs to
produce more valuable outputs
Þ The factors of production, inputs, can be combined in
different proportions
Land
Inputs Labour
(Economic Production Outputs
resources) Process
Enterprise
Goods Services
Capital
Þ For a business to be competitive it should combine these
inputs efficiently so it makes the best use of its resources
Operations Department
Þ Role it to take inputs and change them into outputs for
customer use
, Þ Operations manager is responsible for making sure that
raw materials are provided and made into finished goods
and services
Þ A typical manufacturing business will have:
Þ a Factory Manager who will be responsible for the quantity
and quality of products coming off a production line
Þ a Purchasing Manager will be responsible for providing
the materials, components and equipment required for the
production
Þ a Research and Development Manager will be responsible
for the design and testing of new production processes
and products.
Productivity
Þ the level of production is the total output of a business in a
given time period- different to productivity
Þ Productivity is how business can measure its efficiency
Productivity = output
Quantity of input
Þ Businesses often want to measure the productivity of one
of the factors of production or inputs. This is measured by
dividing the output over a given period of time by the
number of employees
Labour Productivity = output
Number of employees
Increasing productivity
Þ Can be raised by either using fewer inputs to produce the
same output or using the same inputs to produce a higher
level of output
Þ Improve quality of the product and inventory control to
reduce waste
Þ Replace employees with machines
Þ Improve training to increase employee efficiency
