Choosing the right method of production

Overview

How the skill level of the workforce affects the choice and trade-off between unit cost and flexibility across the three methods.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Name four factors that determine which method of production a business chooses.

   Model answer

   The size of the market, the degree of standardisation the customer will accept, the capital available, and the skills of the workforce all determine the choice.

2. 2

   Why does the size of the market determine the method of production?

   Model answer

   Flow production only recovers its huge set-up costs over very large volumes, so a small market must be served by job or batch production.

3. 3

   Which method suits a product customers expect to be individual?

   Model answer

   Job production suits it, because each item can be made to that customer's own specification.

4. 4

   Which method suits a standardised product sold in millions?

   Model answer

   Flow production suits it, because the low unit cost achieved from continuous output more than repays the heavy investment in the line.

5. 5

   How does the amount of capital available restrict the choice?

   Model answer

   Flow production requires very heavy investment in machinery before any output is sold, so a business without access to that finance must use batch or job production.

6. 6

   Explain how the skill level of the workforce affects the choice.

   Model answer

   Job production depends on highly skilled craft workers, while flow production is designed around narrow repetitive tasks that need only short training.

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