CASH FLOW RECALL

Calculate net cash flow for the month

of July
A Breath of Fresh Hair is a
very popular and well- 22,000
established salon in Shropshire.
The business has many regular
customers who book their
appointments months in
advance. The predicted cash 8,000
flows for July are shown in the
graph below.
 Complete Task 1 and 2 – 10 minutes

Florist Nightingale is a busy flower

shop based in Lincolnshire. The
owners, Rose and Petal, are
concerned about the seasonal nature
of their business and the impact this
has upon their cash-flow. They have
drawn up a cash-flow forecast to
illustrate the problem.
 Task 2

Vans, Pans and Motorhomes specialises

in everything a person could possibly
need for camping, caravanning and
outdoor leisure. The firm has tried
various ideas to help reduce the impact
of seasonality on the business and, in
order to monitor this, the owners have
produced a cash-flow forecast.
2.3 Topics
Over the next few weeks, we will be going through the following topics:
◦ Business operations
◦ Working with suppliers
◦ Managing quality
◦ The sales progress
Feline Foods is moving to a new factory. They have a guard dog, a cat and a pet
mouse. However, the animals don’t get along in the van - so they can only take
one at a time.

Then there are other problems... they can’t leave the dog alone with the
cat, because the dog chases the cat. They can’t leave the cat and the mouse
together, because .... well, we all know what would happen!

How can they safely get all 3 of their animals to their new factory?

Topic 2.3 Making operational decisions

2.3.1 Business operations
Quality control V quality assurance – what do
you understand about these two? - 5 minutes
actions taken to design and
Measures and procedures
manufacture a safe and
that need to be followed
effective product

Quality assurance

Quality control

involves the design of

processes, such as
Prevents unsafe products Series of tests carried out to documenting standard
from being distributed have sure a product is safe Relayed to all team members operating procedures
(SOPs)
 The production of goods and provision of services:
quality control V quality assurance
Quality control
Advantages Inspection is carried out by a specialist
Reduces the risk of a faulty product reaching
the customer
Problem areas can be identified and action
taken
Disadvantages Waste levels can be high as a fault will only
be found at the end of the process
Requires specialist personnel
Operatives may feel demotivated as they are
“being checked up on”
Quality assurance
Motivated staff as everyone is given responsibility
Focus on quality throughout the process
Less waste from reworking or scrapping faulty goods
Better reputation due to quality products
Relies on commitment of all staff
Training must be provided
Productivity can be reduced
2.3.1 Business operations

◦ IN THIS UNIT YOU WILL LEARN:

◦ The purpose of business operations:
◦ to produce goods
◦ to provide services

◦ Production processes:
◦ different types: job, batch, flow
◦ the impact of different types of production process: keeping productivity up and costs down
and allowing for competitive prices.

◦ Impacts of technology on production:

◦ balancing cost, productivity, quality and flexibility
The purpose of business operations

Businesses operate to produce products to sell:

◦ These can be goods
◦ Tangible products (they can be touched)
◦ Businesses transform raw materials into finished goods
◦ Examples include cars and computers
◦ Services
◦ These are intangible products (they cannot be touched)
◦ Examples include banking and teaching
 Methods of production

◦ Production is the process of taking raw materials and turning them into a finished product
◦ This can involve both workers and machinery
◦ Three methods of production are:
◦ Job
◦ Batch
◦ Flow

https://www.youtube.com/
watch?v=Xnaj9ULhwqU

https://www.youtube.com/
watch?v=JOWoNQKs6PE

https://www.youtube.com/
watch?v=016nnDqRf3Q
Research task – 30 minutes
What is the What are two What are two Provide 2 real life
method of advantages disadvantages examples
production

Job

Batch

Flow
 Job production
Why does this type of ◦ The production of one off items to meet the needs of each individual customer
production method allow
businesses to charge a ◦ Cheap and easy to set up, but more expensive to produce
premium price?
◦ Often a specialist service
◦ Time consuming to produce
◦ Meet specific needs of customers
◦ Examples include:
◦ Tailor made clothes
◦ Specialist cakes and bakery businesses
◦ Web designs
 Job production
https://www.youtube.com/watch?v=-_qwsa4eY8k

Advantages of using job production Disadvantages of using job production

Low cost to set up initially
How and where is Jon
Snow’s sword made? Products can be tailor made to suit
individual needs
A premium price can be charged
Difficult to achieve economies of scale
Often requires skilled labour
Time consuming

Care is usually taken over each item Goods are expensive which may limit the
resulting in high quality market
Allows a business to differentiate itself from Output will be limited
competitors
 Batch production

◦ Batch Production
◦ Identical items are produced in groups (batches), each item passing through the production process at the same time
◦ Allows for cheaper and quicker production of individual items
◦ More uniform products
◦ Variation can be achieved in different batches
◦ Examples include:
◦ Bread
◦ Jeans
◦ Garden furniture
 Flow production
https://www.youtube.com/
watch?v=Q2OWpAJxMos
◦ Items move along the production line in a continuous process
◦ Suitable for mass production
How are Pringles made?
◦ Large scale
◦ Identical items
◦ Uses specialist machinery
◦ Workers are each responsible for a small step along the process, this involves
◦ Specialisation
◦ Division of labour
◦ Examples include:
◦ A toothpaste factory
◦ Mass produced food goods
Flow production

Advantages of using flow production Disadvantages of using flow production

Efficient process due to: High initial costs in:
Specialisation of workers Machinery
Division of labour Computers
Use of machinery Training
Low cost per unit Mistakes or problems can shut down the
whole process
Consistent quality Repetitive work leading to low motivation

Continual output leading to less need to hold Standardised products only

stock
 Starer – what are the methods of
production?
• Three
methods of
production
are:​
 Job and flow production – 10 minutes

Job production Flow production

Can you think of 2 items that List 5 items in your house that were made List 5 items in your house that were made
can be made using job or
using job production using flow production
flow?
When is each method 1) 1)
appropriate for these items? 2) 2)
3) 3)
4) 4)
5) 5)
Select 1 of these items and explain why job Select 1 of these items and explain why flow
production was appropriate. production was appropriate.
 Case study question – 13 minutes
Serving as the inspiration behind Matthew Vaughn’s 2014 film ‘Kingsman: The Secret Service’, H.
Huntsman & Sons (Huntsman), is a high-end fashion house and tailor located on Savile Row, London. Savile
Row is a street in Mayfair, central London, famous for being a traditional bespoke tailoring district for men.
Founded in 1849, Huntsman has a reputation for being one of the finest and most long-standing houses on
Savile Row. Huntsman make suits that are based on a customer’s individual measurements, posture, choice
of fabric and style. The production process, which takes place in-house, typically takes several months and
will require numerous fittings to ensure the perfect fit. A bespoke Huntsman suit costs in excess of £5,000.
Huntsman has attracted many high-profile clients throughout its history including kings, presidents, prime
ministers and many Hollywood stars, global musicians and international sports stars. David Walliams, Sam
Smith, Winston Churchill, Brad Pitt, Liam Payne, and Chris Eubank are just some of Huntsman’s clients.
Examination Style Questions
Which one of the following is the production process used to mass produce identical items on a production
line? (1 mark)
Which two of the following are disadvantages of using a batch production process? (2 marks)
Explain one benefit to a business of using flow production to manufacture its goods. (3 marks)
Analyse the impact on Huntsman of using job production to produce bespoke suits. (6 marks)
Answers
 Productivity
◦ This is the output per worker –

◦ For example : if a bakery business employs 5 workers and they made 50 cakes in a day, their productivity would
be 10 cakes per day

◦ The formula (note this down in your book)

◦ Productivity = Total output

Number of workers
◦ 1min with the person next to you

How can you improve

productivity?
Task 2 - Explain how the following actions could improve productivity
for a business (the first one has been done for you) - 7 MINUTES

◦ Have more effective work practices – if business are well

organised and have good working practices then there will
be less duplication of work, fewer mistakes and less time
wasted when production occurs. This means that the
business will get more output from their employees. As a
result productivity increases and costs of producing each
unit will fall.

◦ Providing training for employees

◦ Provide more or better equipment

Task 2 - Explain how the following actions could improve
productivity for a business (the first one has been done for you)

◦ Have more effective work practices -

◦ Providing training for employees – if employees are trained well
then they will become better at their job. This means that they
can produce more in a given period of time and make fewer
mistakes. This will reduce the cost of producing each good or
service.

◦ Provide more or better equipment – if businesses improve their

machinery then products can be produced faster and with
improved quality. This means that it will take less time to
produce each product which will save the business money
Impact of technology on production –
improvement in productivity
◦ Robots and machines can
work 24/7
◦ They do not need breaks,
lunch hours, time off or
holidays
◦ This will increase the
productivity of a business
producing products
◦ Productivity is output per
hour https://www.youtube.com/
watch?v=a-7Azih0D98
 Specialisation and Division of Labour

Technology allows businesses to specialise, increasing productivity

◦ Division of labour
◦ Specific tasks are allocated to each member of staff
◦ On a car production line one person may be responsible for adding the wheels before the car moves to
the next person to add the hub cap
Could you work in a ◦ Specialisation
chocolate factory?
◦ The result of division of labour whereby each employee becomes an expert at their specific task

https://www.youtube.com/
watch?v=Meo0s54s1sw
 Specialisation and Division of Labour

Advantages Disadvantages
• Increased productivity due to specialisation • Boredom due to monotony
• Lower unit cost • Less flexible workforce
• Greater consistency • Demotivated work force
• Specialist/expert workers • Risk or process becoming automated
Keeping costs down

◦ A business will set targets linked to keeping unit costs as low as possible whilst not affecting quality.
◦ Technology influences unit costs:
◦ Increased number of units produced
◦ Spreads fixed costs
◦ Negotiate discounts with suppliers (bulk buying)
◦ Greater use of assets
◦ Productivity
◦ Efficiency of workforce
◦ Use of workforce hours
◦ Material usage
◦ Reduces wastage
 Impacts of technology on production

◦ Increased competitiveness
◦ Ability to reach global markets
◦ E commerce
◦ Greater productivity and consistency/quality
◦ Lower unit costs and less waste

◦ Move from labour to capital intensive

◦ Redundancies
◦ Retraining
 Impacts of technology on production:
balancing cost, productivity, quality and flexibility
◦ Cost
◦ Initially expensive to pay for new technology
◦ However, reduces unit costs in the long run
◦ Productivity
◦ Increased output per worker
◦ Quality
◦ Increased consistency with less waste
◦ Improved quality without human error
◦ Flexibility
◦ Ability to change products being produced
◦ A range of products can be made on same machinery