4.3 Scales of production Notes

Scales of Production

Understanding the Scale of Production

1. The scale of production refers to the volume or quantity at which a product is manufactured.
2. The choice of production scale affects the cost, efficiency, and type of production process used.

Economies of Scale

1. Economies of scale occur when increasing the quantity of production leads to lower costs per unit.
2. This happens because:
   1. Bulk purchasing reduces the cost of raw materials.
   2. Efficient machinery & automation lower labor costs.
   3. Fixed costs (e.g., factory rent, equipment) are spread over more units.
3. However, large-scale production requires significant investment in:
   1. Expensive machinery and factory space.
   2. Skilled labor or automation to manage production.
   3. Logistics & storage to handle large volumes.

Types of Production & Their Characteristics

1. Production processes vary depending on scale, cost, customization, and efficiency.
2. Below is a breakdown of different manufacturing methods with new examples and analogies.

1. One-Off Production (Custom, Unique Items)

1. What It Is:
   1. Producing a single, highly customized product.
   2. Requires skilled labor and specialized tools.
   3. Often used in luxury, medical, or artistic industries.
2. Examples:
   1. Custom wedding dresses – Handcrafted based on individual measurements and designs.
   2. Handmade guitars – Crafted for specific musicians with unique wood and tuning.
   3. Architect-designed homes – Houses built exactly to client specifications.
3. Advantages:
   1. Full customization
   2. High-quality craftsmanship
4. Disadvantages:
   1. Expensive due to labor and material costs
   2. Time-consuming, not scalable

2. Batch Production (Producing Limited Quantities)

1. What It Is:
   1. Producing a set number of items in groups.
   2. Uses specialized machines but allows for adjustments between batches.
   3. Common ford food, seasonal items, and mid-scale manufacturing.
2. Examples:
   1. Limited-edition sneakers – Nike releases special designs in batches.
   2. Bakery pastries – Cakes and muffins are baked in batches to meet demand.
   3. Board games – Produced in a set quantity before the next print run.
3. Advantages:
   1. Lower unit costs than one-off production
   2. Flexible – can change designs between batches
4. Disadvantages:
   1. Storage costs for unsold items
   2. Requires stopping production to switch designs