Definition of production

• Production takes place when

resources such as raw materials or
components, are changed into
‘products’.
• It refers to those activities that
bring a product into being.
• In economics, factors of production, resources, or inputs are
what is used in the production process to produce output—
that is, finished goods and services.
• The utilized amounts of the various inputs determine the
quantity of output according to a relationship is called
the production function.
• There are three basic resources or factors of
production: land, labor and capital.
• The factors are also frequently labeled "producer goods or
services" to distinguish them from the goods or services
purchased by consumers, which are frequently labeled
"consumer goods".
• All three of these are required in combination at a time to
produce a commodity.
• Production systems
• In a job shop machines are grouped by technological
similarities regarding transformation processes,
therefore a single shop can work very different
products
• Flexible Manufacturing System: in the middle there are
two rails for the shuttle to move pallets between
machining centers , in front of each machining center
there is a buffer and in left we have a shelf for storing
pallets. Usually in the back there is a similar system for
managing the set of tools required for
different machining operations.
• A production system comprises both the
technological elements (machines and tools)
and organizational behavior (division of labor
and information flow). m) .
• A first possible distinction in production
systems (technological classification) is
between continuous process production and
discrete part production (manufacturing).
• Process production means that the product undergoes
physical-chemical transformations and lacks assembly
operations, therefore the original raw materials can't
easily be obtained from the final product, examples
include: paper, cement, nylon and petroleum products.
• Part production (ex:cars and ovens) comprises
both fabrication systems and assembly systems.
• In the first category we find job shops, manufacturing
cells, flexible manufacturing systems and transfer lines,
in the assembly category we have fixed
position systems, assembly lines and assembly
shops (both manual and/or automated operations).[
• Another possible classification is one based
on Lead Time (manufacturing lead time vs
delivery lead time):
• engineer to order (ETO,
• purchase to order (PTO),
• make to order (MTO),
• assemble to order (ATO) and
• make to stock (MTS).
• The concept of production systems can be expanded to
the service sector world keeping in mind that services have
some fundamental differences in respect to material goods:
• Services can be classified according to a service process matrix:
• degree of labor intensity (volume) vs degree of customization
(variety).
• With a high degree of labor intensity there are Mass Services
(e.g., commercial banking bill payments and state schools) and
Professional Services (e.g., personal physicians and lawyers),
while with a low degree of labor intensity there are Service
Factories (e.g., airlines and hotels) and Service Shops
(e.g., hospitals and auto mechanics).
• The systems described above are ideal types: real systems may
present themselves as hybrids of those categories. Consider, for
example, that the production of jeans involves
initially carding, spinning, dyeing and weaving, then cutting the
fabric in different shapes and assembling the parts in pants or
jackets by combining the fabric with thread, zippers and buttons,
finally finishing and distressing the pants/jackets before being
shipped to stores.
• The beginning can be seen as process production, the middle as
part production and the end again as process production:
• it's unlikely that a single company will keep all the stages of
production under a single roof, therefore the problem of vertical
integration and outsourcing arises.
• Most products require, from a supply chain perspective, both
process production and part production.
 Three methods of production
Figure:
Methods of production

Job production Batch production Flow production

© PhotoDisc
Three methods of production
• It involves the production
of a single product at a
Job production time.
 Job production
Advantages: Disadvantages:
• Able to produce unique • Labor intensiveness and
orders to meet
customers’ individual high costs
needs. • High selling costs
• More likely to motivate • Not fit for mass
workers (see end results)
production and large
• Fairly simple way of
production(one a time) demand
 Three methods of production
• This involves dividing the
work into a number of
different operations, or a
method that involves
completing one operation
Batch production
at a time on all units
before performing the
next.
 Batch production
Advantages: Disadvantages:
• Suitable for a wide • Higher unit costs for
small batch
range of similar
• Less motivated workers
products for repetitive one
• Reducing the need for operation
skilled workers • Careful planning
needed to reduce idle
• More standardized machines or worker
products and less waiting
machinery needed
 Three methods of production
• It is a method of large-scale
production of standardized
products, where each
operation on a unit is
Flow production
performed continuously one
after another, usually on a
production assemble line
• It often includes mass,
repetitive and process
production.

© PhotoDisc
 Flow production
Advantages: Disadvantages:
• Large scale production • Very high investment cost in
machinery and equipment
and reduced unit costs
• Limited ability to meet
• Highly automated and unique customer needs
high efficiency • Repetitive operation and
• Able to produce large less motivation
quantity of products • High costs with the
breakdown of machines
 Factors affecting the choice of proper
production methods

• The nature of the product

Different products may require a specific production method.

• The size of market

A big or small market may require a different production method.
• The stage of business’ development
A start-
start-up firm or large established firm will use different production methods.

• The current state of technology

Changes in technology result in firms using new mass production
methods.
© PhotoDisc
 Production and productivity
• Production is the process of combining units of
inputs (natural, man-made and human resources)
to create output (goods and services) capable of
satisfying human needs and wants.
• Productivity is the increase of output from each
unit in the production process. There are several
ways of achieving productivity. These include the
training of workers and the introduction of
machinery and equipment into the production
process.