Question

Which of the following transformations generally has the highest equipment utilization? O process-focused process O repetitive process O product-focused process specialized process

Answer 1

The product-focused process generally has the highest equipment utilization, optimized for high-volume, low-variety production. However, the choice between production technologies depends on input costs, with firms opting for more labor or machinery as costs fluctuate.

Step-by-step explanation:

Of the transformations listed, the product-focused process generally has the highest equipment utilization. This process, also known as a continuous or line process, is designed for high-volume, low-variety production where the same products or services are offered on a continual basis. In other words, the equipment is consistently used to produce the same items, leading to high efficiency and utilization rates. In contrast, a process-focused process is designed for low volume, high variety and involves general-purpose equipment that is less frequently used, leading to lower utilization. 'Repetitive process' sits between the two but generally has less utilization than product-focused processes. Finally, a specialized process is highly specialized and might not be used as consistently as in a product-focused setting.

When selecting a production technology based on costs of inputs, the ideal choice would adapt to changes in costs. If machine costs increase, firms would shift towards production technology favoring labor (production technology 2). Conversely, if machine hours become cheaper, the firm would shift towards a more machinery-intensive technology (production technology 3), which uses the least labor, capitalizing on the low cost of machine hours to decrease total cost. This decision-making process is evident in the relationship between labor costs and machinery use – as labor costs rise, firms tend to use more machinery to lower the total production cost.

Answer 2

The product-focused process has the highest equipment utilization, often characterized by a continuous flow and high volume standardized production. A firm tends to choose the production technology that offers the lowest total cost, which can be influenced by changes in labor and machine costs.

Step-by-step explanation:

The type of transformation process that generally has the highest equipment utilization is the product-focused process. This process is also known as a continuous or assembly line process, which is set up to manufacture a large volume of standardized goods. With a product-focused process, the machinery is used more intensively and the production line is tailored to produce one type of product, which leads to higher equipment utilization compared to other processes.

In contrast, a process-focused process is more adaptable to a variety of products but utilizes equipment less intensively. A repetitive process falls in between these two types, with modular setup where customization can be added. Finally, a specialized process is used for a specific niche and may not have as high equipment utilization as a product-focused process.

When assessing changes in production technology and costs, a firm may shift towards more labor-intensive technologies when the cost of machinery increases, as outlined in the given examples. Conversely, with cheaper machine hours, a firm might opt for more automation and less labor. This shift aligns with the firm choosing the technology that offers the lowest total cost, such as production technology 2 or production technology 3, depending on whether labor or machine costs are higher.