...CHAPTER 11 BACKGROUND TO SUPPLY: THE THEORY OF PRODUCTION AND COST Grading * straightforward questions & definitions ** challenging questions *** more challenging questions MULTIPLE CHOICE QUESTIONS In economics, the short run is a period of time (*) 2 of one year or less. 3 in which all inputs are variable. 4 in which all inputs are fixed. 5 in which the quantity of at least one input is fixed and the quantities of the other inputs can be varied. 6 in which all inputs are variable but technology is fixed. Which of the following statements is correct? (*) 2 The short run is a time period of one year or less. 3 The short run is a period of time during which the quantities of all inputs can be varied, but technology is held constant. 4 The short run is a period of time during which the quantity of at least one input is fixed and the quantities of the other inputs can be varied. 5 The long run is a period of time during which the quantities of all factor inputs are fixed. 6 The time period separating the short run from the long run is at least 3 months. Answer Questions 3 and 4 with reference to the following table, which shows the short-run production function of a polo ball manufacturer. |Number of machines |Number of workers |Output | | ...
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...TOPIC 5: PRODUCTION THEORY Production refers to the creation of wealth for the sole purpose of utility in order to improve the welfare of people. It is creation of goods and provision of services to satisfy human wants. Forms of production a) Direct production. Also known subsistence production and it refers to production of Goods for own consumption. It s output is normally low. b) Indirect production. It is production for sale. It is also known as market economy. It uses modern production methods / technology. Levels of production There are three levels of production. a) Primary level. This is the basic level where production starts. It’s sometimes known as extraction level and involves production of raw materials. E.g. mining b) Secondary level. This is also known as transformation / manufacturing level. In this level output from primary level is used to produce finished goods or services. E.g. engineering, carpentry c) Tertiary level. This summarizes the production process. It involves the supply of finished goods and services to the final consumer. E.g. transport, banking Types of goods produced 1) Consumer goods. These are goods which satisfy human wants directly. They are categorized into durable and non-durable goods. 2) Producer goods. This refers to categories of goods which give indirect utility to the consumer. 3) Services. These are intangible economic goods. E.g. teaching, insurance Factors of production These...
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...ISL 223E FUNDAMENTALS OF PRODUCTION MANAGEMENT CASE STUDY 2[1] Due Date: 17. 10. 2011 – until at 17.00 to Room B408[2] NorSal TRONDHEIM NorSal Trondheim operates a salmon processing facility where fish are purchased from local sources along the North Sea, processed at the facility, and sold to customers for distribution. The plant manager, Inger Hansen, is contemplating a plant modernization to upgrade the technology in the plant. While the plant performs well enough now, modernizing equipment would allow the plant to increase capacity per hour, which is particularly advantageous because the factory has enough demand to cover the additional capacity. Currently, the plant operates five days a week, two shifts of 30 workers per shift. The workers are paid $10 per hour. Adding a third shift is not possible because the plant is cleaned during the third shift. The firm is contemplating a plant modernization to upgrade existing equipment, which should increase the plant’s output while lowering energy costs. Using the current equipment, around 1.500 pounds of salmon can be processed each hour, while the new plant would be able to processed each hour, while the new plant would be able to process 2.000 pounds per hour. The updated equipment is made by the same manufacturer as the existing equipment, and the new equipment quickly. For this reason, costs to train personnel are assumed to be negligible. The production manager, Bjorn Pedersen, is skeptical about undergoing...
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...The Crucial Importance of Production and Operations Management Author(s): Charles G. Andrew and George A. Johnson Source: The Academy of Management Review, Vol. 7, No. 1 (Jan., 1982), pp. 143-147 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/257260 . Accessed: 22/10/2013 05:14 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academy of Management Review. http://www.jstor.org This content downloaded from 14.139.155.243 on Tue, 22 Oct 2013 05:14:17 AM All use subject to JSTOR Terms and Conditions ?Academy of Management Review 1982, Vol. 7, No. 1, 143-147 The Crucial Importance of Production and Operations Management CHARLES G. ANDREW University of Hartford GEORGE A. JOHNSON University of Connecticut The history of the recent decline of production and operations management (POM) in academic importance is traced. POM's fundamental importance as a functional area is argued on the basis...
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...By having multiple productions plants globally, it is able to create flexibility and backup options should one of their plants fail to deliver when there is natural disasters or uncertainty within the country. During the Thailand floods, its production was greatly affected as its plants were shut down and unable to operate due to the damage caused by the flood. (Thailand was responsible for the production of 891,000 forecasted vehicles, one of the biggest in SEA). Due to the crippling of its plants in Thailand, Toyota has to scale back its productions in the rest of SEA due to issues faced while exporting certain parts from Thailand. The car maker estimates the disruption in the parts supply chain has affected about 100 kinds of parts. The overall output loss caused by the floods amounted to an estimate of 37,500 vehicles. ISSUES FACED: Toyota has to be prepared for unforeseeable circumstances such as natural disasters. As shown, during the Thailand floods in 2011, its production was scaled back by 37,500 vehicles. Backup supplies from its other branches around the world creating the same vehicle parts could be supplied to SEA during this period to alleviate the burden faced by the plants in Thailand. OPINION: Safety is one of Toyota’s key concerns and also selling point. This must be ensured from the various parts that make the car, from the start to the end. It is understandable that Toyota decided to specialize each plant so that they can be focused on what they produce...
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...out over a co-worker * 10 votes to dismiss Foreman Edward George The workers are the most important asset to the company, so their interest should be first. Second, you have to figure out what to do about the votes to dismiss Ed George. Solutions: Talk to Ed George about his problems with his co-workers. Hold a meeting and get even more workers involved in the voting process, the take another vote. Item#4 Problems: * Overloading which can result in interruption of electrical power. * Not being reachable for Southern Power Solution: Contact Southern Power ASAP. See if they could come out and help with the problem. Item#5 Problem: * Balancing your work and his until Wednesday * Upping production by mid December in the long run Upping production would be the most important problem, because it’s long term. Balancing your work load is just something you have to do until your boss gets back. Solution: Schedule your...
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...3/1/2014 Unknown A. Workflow In order to improve the workflow in the plant, Shuzworld will have to improve the layout of their facility in order to create their product in a cost efficient and productive manner. This will enable Shuzworld to increase productivity, while ensuring the quality that consumers have grown to be accustomed to. Shuzworld will be able to accomplish this by equalizing the task times at the company’s work stations in order to ensure that employee time is maximized to its full potential. This can be accomplished by organizing employees into work cells that focus primarily on the product they are working on. By focusing on the product within the work cell, the company will be able to make better use of the production floor, as well as reduce the amount of direct labor required while increasing the sense of participation by employees. This will translate into higher rates of productivity on the assembly lines. One way to improve the work area for the employees is to create work cells that enable employees to communicate with each other in a simpler fashion, as well as have employees cross trained so that they can intervene and assist when necessary. Instead of having a traditional assembly line, the assembly line should be made into a U shape. The U shaped assembly line will reduce the amount of employee movement, and make it easier for employees to communicate amongst themselves during the construction process (MyOMLabs, 2012). It will also make it...
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...Discuss why Bolton’s article titled “Imitation vs. Innovation” is useful for developing new product for international market. Argue why reflective imitation can be considered as one of the sustainable business strategy. Generally speaking, there tends to be a negative attitude toward imitation for ones own benefit, especially in business. Oftentimes, imitated products are labeled as “counterfeits, knockoffs” etc. this bias is especially prevalent in the United States, due to the U.S. being more of an innovating market rather than an imitating one. What many people fail to recognize is that as Bolton states in her article, “legal imitation can be an astute competitive strategy in its own right, involving substantial investment, creativity, and expertise.” For Bolton, the notion that imitation is the lazy and effortless way to make money off the work of another business is not correct. Bolton has a more extreme view endorsing the use of imitation, but also differentiates between copying and what is known as “reflective imitation.” Reflective imitation is generalized by Bolton as “learning by watching”, rather than “learning by doing.” There are many possible benefits to using this method for introducing products in the market. In their article, Suarez and Lanzolla state “A firm’s innovation has an almost even probability of success or failure.” This is where the learning by watching comes into play. Rather than copying everything from the innovator, in reflective imitation, the...
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...CYCLERMATE PROJECT REPORT Integrated Business Contents * Introduction * Analysis of Business Environment * Analysis of Business Management * Solution * Conclusion Introduction Dai Armstrong and Lewis Llewellyn are the two men who planned to open their own company after being superfluous due to the shutting down of the steel plants in their town of South Wales were Dai Armstrong and Lewis Llewellyn. They both were the part of the local club of cycle touring and because of that, they both became good friends and as a result decided to start Cyclermate which was a bicycle manufacturing company that was laid down in the year 1988. In the initial year Cyclermate possessed a great influence over the share of the market. The whole lot appeared to function with no problems and difficulties up to the year 2010, the time when the company confronted lots of consequences with respect to operation human resource and finance. Specifically, demand by the purchasers fell continua sally even though the prices were cut down by the company; the distinguishing attributes of the goods were not up to the quality as they were earlier. The rising complaints from the customers regarding degrading quality and faults in the product and the concern by the bank manager regarding the overdraft could cause trouble if the problems are not solved as soon as possible. The report is with regard to the financial problems and various other problems confronted...
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...CHAPTER ONE – BUSINESS ORGANIZATION AND ENVIRONMENT Unit 1.1 – Nature of Business Activity • A business is a decision-making organization that uses inputs to produce goods and/or services Inputs: resources used in the production process Outputs/products include: Goods: physical, tangible products Services: intangible products Exist to satisfy the needs (basic necessities) or wants (desires) of people, organizations and governments Important to have clearly defined functions/processes Ex. human resources, production, marketing and finance Customers: people/organizations that buy the product Consumers: those who use the product Consumer goods: sold to the general public and can be split into: Consumer durables: products that last a long time Non-durables: products that needs to be consumed very shortly after purchase Capital goods: purchased by other businesses Added value: difference b/w the value of inputs and the value of outputs Allows a business to sell its products for more than production cost (leads to profit) Comes in the form of: Speed/quality, prestige, brand image, feel-good factor, perceived value, inability to achieve cheaper products elsewhere Opportunity cost: best alternative decision that is foregone when making a decision Leads to rational decision making Choose options that will generate the highest valued benefits to the business Role of profit: Acts as incentive to produce Acts as the reward for risk takers Encourages innovation...
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...Guillermo’s Furniture Store Concepts Denisse Cruz FIN/571 March 19, 2013 James Ciaramella Guillermo Furniture Store Concepts Paper First week (1st) individual assignment was write no more than 800 word paper explaining the finance concepts found in the Guillermo Furniture Store Concepts Paper and relate finance concepts to the context of the scenario. Following Finances Concepts and relationship with scenario assigned. Finance Finances are the studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. Finance is defined as the set of activities and administrative decisions that lead a company to finance the acquisition of fixed assets such as land, buildings, furniture, etc. and circulating such as cash, accounts and notes receivable, etc. The analyses of these decisions are based on the flows of income and expenditure and its effects on management objectives that the company intends to achieve. The definition of finance comprises several factors that are involved directly with them and some of them are such as investment, brokerage, personal financial planning, financial planners and advisers, securities analysts, agents real estate, etc. Finance Concepts at Guillermo’s Scenario 1 Guillermo Navallez, is an entrepreneur localized in Sonora Mexico. Sonora Mexico is a large furniture manufacturing location in North...
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...quarter sales to be 30,000 units. However, it was recently discovered that forecasted estimate was incorrect. Through thorough analysis it has been determined that the actual demand target for the Ultramover is expected to be 30,000 units per month, and 90,000 units per quarter. As a result of this new information, PEMC has hired this consulting firm to provide solutions that will enable PEMC to meet its production needs. The purpose of this paper is to provide those recommendations for improved productivity (University of Phoenix, 2011). Determining the Needs of the Customer In order for us to determine the needs of PEMC we must first have a clear vision of the company’s analysis data for the Ultramover. Through this review of the data, we have determined that PEMS currently only has the capability to produce ten thousand units of the Ultramover each month by operating two production shifts five days a week. Given the challenge of increasing the output of until from 10,000 to 30,000, we have determined three specific areas in which PEMS must correct in order to meet its production demands (University of Phoenix, 2011). Needs of the Customer One of the key duties of this consulting firm is to determine the needs of the customer in order to make recommendations. We have...
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...To: Board of Directors of Caribbean Brewers Inc. From: Comptroller, Caribbean Brewers Inc. Subject: Production Costs, Performance Management System, & Income Tax Audit Risks Date: Background In 2005, the Gera International conglomerate purchased 75 percent of the common shares of an Antiguan brewery, the producer of “Tigua” beer. The Antiguan brewery was renamed Caribbean Brewers Inc. Three years later, the production facilities at the brewery were expanded, and the production capacity doubled. In 2009 and 2010, sales volumes of Gera beers increased dramatically. Although production systems and processes have not changed since the acquisition, Caribbean Brewers’ costs of production have also increased significantly. As a result there has been growing dissatisfaction amongst production employees, especially those whose compensation is linked to the supposed production inefficiencies and rising costs. In addition, Caribbean Brewers Inc. has received a letter from the Inland Revenue Department of Antigua informing us that our tax filings for the years ended December 31, 2008, 2009 and 2010 will be audited at the end of the month. Purpose The purpose of this report is to: • Assess production costs to determine if they have been properly allocated, • Analyze the current performance measurement system, • Determine if Caribbean Brewers Inc. has been compliant with Antiguan tax laws, and • Recommend solutions to overcome declining...
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...Machinery Production stagger? Let the flour milling processing machinery production stagger actually is a way to save energy. So, what is the production stagger of flour milling processing machinery? The so-called production stagger is, in fact, be energy use was divided to different processing stage, will be flour milling processing machinery and energy consumption of the production process in the period of use of electricity tariff rate is low, can save our production cost. Then, what specific benefits we can get if we let the flour milling processing machinery production stagger? Now let us try to understand it: The flour milling processing machinery load shifting production of the most important benefits is to reduce the flour milling processing machinery production cost, in a certain way, it also let our electricity substantially reduced, thus greatly save our production costs, of our economic interests will have more advantages. The staggering production and processing of flour milling processing machinery can also to avoid the occurrence of dielectric loss for the phenomenon of excessive, reducing loss of power energy, also can reduce the motor load, to avoid the dangerous situation to which because of the failure of the motor and lead, so that our production safety can be ensured. Because of the above reasons, when we are in the using of flour milling processing machinery, it is best to let the flour milling processing machinery for peak production, this will...
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...Kimberly Albino Candace Hampton Frances Kately Husein Khan Daniyell Payne Hayley Romine July 19, 2015 Table of Contents Abstract 3 Key Issues and Problems 4 Decision Alternatives… Resolutions and Solutions… Recommendations… References… Abstract The purpose of this case study is to examine, classify; analyze critical concerns as well as difficulties that are impacting Precision Worldwide, Inc.’s organization. Notably, Precision Worldwide, Inc. has several competitors who are well-disposed in the market due to their reduced pricing and product substitutions. The method in which this case study observation is arranged will explore findings and opportunities related to price and production cost; the ramifications of demand in other markets. The assessment of this case study, in conjunction with arriving to an appropriate cost for materials and freight, will help determine the recommended best course of action for Precision Worldwide, Inc. and Hans Thorborg in deciding the preferred product for the organization. Key Issues and Problems Precision Worldwide, Inc. (PWI) is faced with a business decision that will potentially affect the organization’s continuity and profitability. The organization recently held meetings to discuss the introduction of a substitute product into the marketplace by a competitor. In making a business decision to ensure the ongoing future of the organization, the key issues and problems need...
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