- Overtime involves paying staff extra to work longer hours than their contract states.
- This usually requires workers/employees that are willing to work overtime.
- It generally expects a higher rate of pay which pushes up labor costs.
- However, the workers/employees already know what they are doing (they are trained) therefore it may be better to use over time than temporary employees who need to be trained which may cost making overtime potentially cheaper to do.
Hiring Part-time Temporary Workers/Employees
- This gives extra flexibility to an employer.
- It can reduce fixed salary costs, reducing the break-even point for the business.
- But, communication is harder and customer service quality decreases damaging the business’ reputation.
- You only pay temporary employees when you need them, however, they need training and motivation will be harder.
- Leasing capital is when you let other businesses borrow your equipment or ‘something’ for a certain period of time. e.g. When borrowing a machine for 3 months.
- You only pay for it when you need it keeping fixed costs down.
- These help with cash flow problems as they offer credit.
- They can increase what you want with little notice making them flexible to your business.
- Increases amount of stock at short notice.
- Flexible production is a factory that can manage to change products and market quickly. They can adjust to change.
- Generally, smaller companies are better at flexible production while the big companies are not so good at flexible production.
Holding Finished Stock
- Holding finished stock means that you can cope better with demand.
- However, you have to the stock somewhere which questions security and cost of storage.
Firms approached by customers with special orders at a different price to their regular selling price. There are high-price such as an Airbus Super-Jumbo bought and kitted out for a Prince and low-price special orders like TK Maxx offering to buy 10,000 of last season’s Ted Baker t-shirts for £5 each.