Question

1. Compare and contrast the economies of scale vs the diseconomies of scale. Explain

2. What is a bottleneck in a service provider? Elaborate your answer with an example in a service provider company.

3. List the methods to overcome the imbalance capacity in a manufacturing system.

Answer 1

1. When a firm is able to produce higher volume of output at lesser cost it is said to be as economies of scale. In other words, due to the effective utilization of resources, if the producer gets an edge than its competitor, is said to be as economies of scale. For example: Technical economies of scale: where a company is producing higher volume of output because of its latest technology.

Managerial economies of scale: when the people get more and more experience in one task, the wastage of times comes down and produce more units of output.

On the other hand, diseconomies of scale represents, the cost of production has been increases due to different practices of the firm.

In general, most of the firms operates and interested to operate in economies of scale, it may resulted in good profits to the firm.

2. Bottleneck in service sector, the higher time taken to complete a task in a given process comes under bottleneck. For example, if you visit a hospital, the bottleneck time may be the interaction with the doctor to get treatment. It may starts with taking admission into the hospital (taking an OP), and ends with taking the prescription. Even in all these, the most time taking and important process is interaction with the doctor, conversations about the illness, disease etc.

3. The process, in general consists of many stages and steps; includes:

• estimate the demand for future or for a given time period
• evaluation of the existing production capacity
• listing the gap
• Identify the alternatives to fill the gap
• Check financial and other required support
• focus on qualitative issues
• finally implement the alternative you have selected.