My

Booklet
on
Production
 Case Study

The Tranton Car Company was restructured and the auto body
repairs department was reduced to a spare parts sales department.
Upon retrenchment, Tom the mist experienced auto body technician
at the company, set up an auto shop in the vacant warehousing
building close to Tranton Car Company.

Question:

List two factors that influenced Tom selection of that location.

The warehousinf building is close to Tranton Car company and
reduced to a spare part sales
Define the term ‘economy of scale’.

Economic of scale is when the more you use the less is the spending.
Also economic of scale can be classified into internal and external
economics.
What are the disadvantages and advantages of large scale
production?

The disadvantages of large scale is that it can lead to increasing

average cost, poor communication, may suffer from slow decision
making and also may be difficult to manage.

The advantages of large scale is that it can benefit from the cost
reduction, may be able to set low prices, may be diversified in
several markets and products and will have access to several
different sources of financial.
What are the advantages of small scale production?

The advantages of small scale production is that it would be easy to

manage, freedom of work, less probabilities of strikes and lockouts,
and more employment.
What are the limits to large scale production?

The limits to large scale production are the extent of the Market,
Nature of Industry, Nature of Demand, Use of Machinery and
Labour and Capital.
Explain the law of diminishing returns.

The law of diminishing returns states that as one input variable is

increased, there is a point at which the marginal increase in output
begins to decrease, holding all other inputs constant. At the point
where the law sets in, the effectiveness of each additional unit of
input decreases
Define the term ‘small firm’.

A small firm is independently owned and operated, is not dominant

in its field and does not encourage in innovative practices.
List the characteristics of small firm.

The characteristics of small firms is:

Flexible-Striking out to put together a small business takes time,

energy and knowledge.

Collaborative-Small-business owners know how to effectively

delegate tasks to people within their organization .

Self-Reliant-Part of the reason people start a business is because of

their desire to be self-reliant.

Accessible-While running a small business offers owners the ability

to set their own schedule, it's important to ensure products, services
and knowledge are accessible to customers.
Discuss the role and function of small firms in your economy.

Role
Increase the number of small enterprises
Increase the value of production
Increase the number of people employed

Function
Small businesses contribute to local economies by bringing growth
and innovation to the community in which the business is
established. Small businesses also help stimulate economic growth
by providing employment opportunities to people who may not be
employable by larger corporations.
List reasons for the survival of small firms to the economy.

Cheap motive power

co-operative organization
Close supervision
Close contact with customers
Greater adaptability to Changes
Explain the term ‘capital intensive’ and labour intensive’ production.

Capital intensive production requires more equipment and

machinery to produce goods than human; therefore, require a larger
financial investment.

Labor intensive refers to production that requires a higher labor

input to carry out production activities in comparison to the amount
of capital required. Labour intensive production can also be found
mainly in developing countries.
What are the differences between mechanization and automation?

The slight difference between automation and mechanization is that

automation is more focused around Computer technology and
electronic data processing that replaces human labour with
machines.

Mechanization is based around machinery and equipment that

ensures accuracy and speed of operation without direct human
involvement.
What are the effects for a country moving from labour intensive
industries to capital intensive industries?

increased output
greater efficiency
fewer people employed
Explain the term ‘Computer Aided Design (CAD)’ and ‘Computer
Aided Instruction (CAI)’.

Computer-aided design is the use of computers to aid in the creation,

modification, analysis, or optimization of a design. CAD software is
used to increase the productivity of the designer, improve the quality
of design, improve communications

Computer-aided instruction includes the use of computers to teach

academic skills and to promote communication and language
development and skills. It includes computer modeling and computer
tutors. Computer Aided Instruction uses a combination of text,
graphics, sound and video in enhancing the learning process.