8. The production capacity and economies
Wednesday, 6 October 2021 14:30
SECTORS AND SIZE
The strategic choice can be:
○ Mass production (revenues thanks to very little costs)Heyyyyy
○ Less products at higher price
In some industries having a mass production is quite mandatory: aerospace, chemical…
to be competitive.
So 2 types of economic advantage:
Higher quality —> higher price —> profit
Lower costs —> profit
STANDARDIZATION: concept upon which the principle of efficiency rely on
There are 2 levels:
○ Products
○ Processes
It introduces the concepts of:
—> normalisation: the fact that one component can be used for different purposes
—> modularity: the fact that a complex good can be decomposed in different products
save time in the production and the time of the employees in designing that product
Standardization is one of the pillar of mass production
PRODUCTION CAPACITY: the maximum amount of output that can be produced in a ce
(ex. How many Kg, number of units, number of guests, hours) [some of them were gre
the pandemic]
When the manager has to assess the production capacity and have to forsee it, he has
account:
• The number of people available
• Which day i keep the company open
• Which mantainance programs are implemented
DEGREE SATURATION OF THE PC: the ratio of the actual production capacity over the t
production capacity —> how close we are getting to the full production capacity, how
exploiting our pc
Ex.
2 pizzeria equal in pc:
Wednesday, 6 October 2021 14:30
SECTORS AND SIZE
The strategic choice can be:
○ Mass production (revenues thanks to very little costs)Heyyyyy
○ Less products at higher price
In some industries having a mass production is quite mandatory: aerospace, chemical…
to be competitive.
So 2 types of economic advantage:
Higher quality —> higher price —> profit
Lower costs —> profit
STANDARDIZATION: concept upon which the principle of efficiency rely on
There are 2 levels:
○ Products
○ Processes
It introduces the concepts of:
—> normalisation: the fact that one component can be used for different purposes
—> modularity: the fact that a complex good can be decomposed in different products
save time in the production and the time of the employees in designing that product
Standardization is one of the pillar of mass production
PRODUCTION CAPACITY: the maximum amount of output that can be produced in a ce
(ex. How many Kg, number of units, number of guests, hours) [some of them were gre
the pandemic]
When the manager has to assess the production capacity and have to forsee it, he has
account:
• The number of people available
• Which day i keep the company open
• Which mantainance programs are implemented
DEGREE SATURATION OF THE PC: the ratio of the actual production capacity over the t
production capacity —> how close we are getting to the full production capacity, how
exploiting our pc
Ex.
2 pizzeria equal in pc:
