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11 Cards in this Set

  • Front
  • Back

What is added value?

Added value is the increase in a product's value that a business creates during the production process.

How is added value calculated?

The difference between:
Cost of raw materials & Selling Price

The difference between:

Cost of raw materials & Selling Price

How might added value be increased?

• Purchasing cheaper raw materials

• Improving efficiency of the production process

• Raising the price of the product

• Achieving brand status

• Offering additional services with a product

• Improving customer access or convenience

What are the three types of production?

• Job production

• Batch production

• Flow / mass production

What is job production?

When a single item is produced based on customer specifications. Unique products are created, made one at a time. It is labour intensive and needs skilled workers. Examples of projects that would use this are:

• Wedding dresses • Football stadiums

• Custom made suits • Bridges

What are the advantages and disadvantages of job production?


• High quality products matched to customer needs

• Employee satisfaction (personal achievements, interesting tasks)


• Increased production times

• More expensive products

What is batch production?

Manufacturing a limited number of identical products. A batch will be made, production stops, gets reorganized, and a new batch of a different product will be made:

• A batch of Size 12 of clothing would be manufactured, then a batch of Size 14 would be made.

What are the advantages and disadvantages of batch production?


• Lower unit costs and higher output

• Allows a business to aim at niche markets


• Semi-skilled workers with reliance on financial rewards

• Time is lost when production has to be reset

What is flow/mass production?

Continuous production of an identical product batch - the product will flow from one stage of production to the next. Examples are:

• Fizzy drinks • Televisions

• Mobile phones • Newspapers

What are the advantages and disadvantages of flow/mass production?


• Lower labour costs and unit costs

• Large quantities produced, can be sold at a lower price


• Breakdowns can halt the production line

• Expensive machinery

• Limited product range

What are the factors that affect the type of production that a business uses?

• The product

• Cost of labour

• Cost of capital

• Money available for investment

• Technology

• Workforce skill

• Market size

• Customer requirements