Chapter VProduction & CostAnalysis
Dr. GOPALAKRISHNA B.V.
Faculty in MBA,SDM, Mangalore
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Production is the creation of goods &services by organising land, labour& capital.
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The aim of production is supply of goods & services for consumption.
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So production is the act of creatingutility or value.
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It conversion of inputs into output –i.e., transforming physical inputinto physical output.
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Law of production are explained inconnection with productionfunctions. A production functionexplains the relationship betweenfactors of production (physical
Definition of production function
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G.J. Stigler
– the production function isthe name given to the relationshipbetween the rate of input of productiveservices & the rate of output of product.
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Prof Leontief
– a production function isthe name given to the relationshipbetween the rate of input of productiveservices & the rate of output of product.It is the economist’s summary of technological knowledge.
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Prof Watson
– production means thetransformation of inputs into outputs. The production function is the name forthe relation between the physical inputsand physical outputs of a firm. If a smallfactory produces hundred wooden chairsper eight hour shift, then its productionfunction consists of the minimumquantities of wood, glue, varnish, labourtime machine time floor sace
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