4.3 Efficiency and Productivity (AQA A Level Business): Flashcards
Exam code: 7132
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Define efficiency (in operations).
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Define efficiency (in operations).
Efficiency means producing with the fewest possible resources — using less time, labour, materials or energy.
Why does efficiency matter?
It gives lower unit costs, higher competitiveness, and better use of resources (freeing cash, reducing environmental impact).
Name two ways to use capacity efficiently.
Streamline the workflow, invest in automation, train staff, use JIT inventory, and preventive maintenance (any two).
Give one difficulty in increasing efficiency.
High upfront cost of equipment, employee resistance, supply-chain bottlenecks, and quality/safety trade-offs.
What is the formula for labour productivity?
Labour productivity = total output ÷ number of workers.
12 workers produce 1,404 boxes. What is labour productivity?
1,404 ÷ 12 = 117 boxes per worker.
13 workers produce 1,677 boxes. What is labour productivity?
1,677 ÷ 13 = 129 boxes per worker.
Higher labour productivity leads to lower unit costs, as long as rates remain the same.
Higher labour productivity leads to lower unit costs, as long as wage rates remain the same.
Name two ways to increase labour productivity.
Targeted training, better tools/technology, performance incentives, and streamlining processes (any two).
Give one difficulty in increasing labour productivity.
Low morale, skill shortages, union resistance / rigid rules, and the learning curve for new technology.
Define capital-intensive production.
Capital-intensive production mainly uses machinery and technology to produce goods or services.
Define labour-intensive production.
Labour-intensive production mainly uses physical labour to produce goods or services.
Give one advantage of capital-intensive production.
Low-cost production at high output, consistent and precise machines that can run without breaks.
Give one advantage of labour-intensive production.
Low cost where labour is cheap, workers can be creative, and they are flexible (they can be retrained).
Efficient firms can respond quickly to orders, which attracts and retains .
Efficient firms can respond quickly to orders, which attracts and retains customers.
True or False?
Efficiency means using more resources to produce more output.
False.
Efficiency means producing with the fewest possible resources (less time, labour, materials, energy).
True or False?
Labour-intensive production suits large-scale production of standardised goods.
False.
Capital-intensive production suits large-scale, standardised output; labour-intensive suits small-scale.
Define lean production.
Lean production is a management philosophy that aims to maximise output while minimising waste.
Name two principles of lean production.
Right-first-time, flexibility, waste minimisation, effective supply chain management, and continuous improvement (any two).
What does the 'right-first-time' principle mean?
Aiming for zero defects — preventing rather than correcting errors, solving problems as they arise.
Define just-in-time (JIT) inventory management.
JIT is where materials and components are ordered as required and delivered 'just in time' to be used in production.
Define the just-in-case approach.
Just-in-case holds a quantity of buffer stock in case of shortages or a sudden rise in demand.
Give one advantage of JIT.
Minimised stockholding costs, improved cash flow, and free storage space.
Give one disadvantage of JIT.
No bulk-buying economies, can't meet sudden demand, and unreliable suppliers can halt production.
Give one advantage of the just-in-case approach.
Stable supply (can meet demand rises), avoids price fluctuations, and builds a reliable reputation.
Give one disadvantage of the just-in-case approach.
Buffer stock is expensive to hold, can become obsolete, and ties up cash.
Give one benefit of lean production.
Less waste (lower unit costs), faster processes, better quality, and higher flexibility.
Give one drawback of lean production.
Supply-chain risk (little buffer stock), upfront investment, staff pressure, and it's not one-size-fits-all.
Lean production works best where demand is steady and suppliers are .
Lean production works best where demand is steady and suppliers are reliable.
How does lean production change a business's structure?
Fewer layers of management, cross-functional teams, and empowered staff who take ownership of quality.
A key principle of lean production is continuous improvement, also known as .
A key principle of lean production is continuous improvement, also known as Kaizen.
True or False?
Just-in-time requires large amounts of buffer stock.
False.
JIT holds minimal stock; it is the just-in-case approach that holds buffer stock.
True or False?
Boeing's 737 line struggled because lean production left it with no buffer stock when a supplier slipped.
True.
With almost no spare parts, a late fuselage supplier in 2019 stalled production, raising costs and delaying deliveries.
Why do JIT suppliers need to be close and reliable?
Deliveries arrive just before use from a small number of trusted suppliers, so any delay would halt production.
Name three technologies that can improve operational efficiency.
Robotics, artificial intelligence (AI), and Internet of Things (IoT) sensors.
How do robotics improve efficiency?
Robots work quickly without tiring, picking/moving/assembling items faster than people and reducing labour costs.
How does AI improve efficiency?
Algorithms predict machine failures, fine-tune schedules and spot quality issues early, reducing downtime and waste.
How do IoT sensors improve efficiency?
Networked sensors stream real-time data (temperature, flow, energy use), letting staff tweak processes instantly to save resources.
Give one benefit of using technology to improve efficiency.
Cuts production time, lowers long-run costs, gives consistent quality, and improves safety.
Give one drawback of using technology to improve efficiency.
High upfront expense, risk of technical failures, a skills gap, job-security worries, and cybersecurity threats.
Robots handle heavy lifting or dangerous tasks, reducing .
Robots handle heavy lifting or dangerous tasks, reducing injuries.
Workers may resist automation if they fear it will lead to their , hurting morale.
Workers may resist automation if they fear it will lead to their redundancy, hurting morale.
Give an example of a business using robotics for efficiency.
Ocado uses AI-guided robotic arms to pick a 50-item grocery order in minutes, lowering unit costs.
True or False?
Automated checks catch errors instantly, giving more consistent quality.
True.
Automated checks catch errors instantly, so fewer faulty items reach customers.
True or False?
Using technology to improve efficiency has no upfront cost.
False.
It has a high upfront expense — buying robots, sensors and software, plus staff training.
Why might a firm stay labour-intensive despite technology?
For flexibility, craft quality, or the lower upfront cost compared with automation.
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