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MODULE 1

Production refers to a sequence of operations that transforms inputs into a

desired form. i.e raw materials to semi-finished goods to finished goods.
1. Transformation by Disintegration- Eg:- Producing furniture from wood.
2. Transformation by Integration(assembly)- Eg:- Producing a television set,
machines, computers from different spare sparts.
3. Transformation by Service- Eg:- Repairs & maintenance of machines like AC,
cars to increase life and performance.
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 To improve quality- To improve quality, the production department undertakes

research & development.
 To reduce cost of production
 To satisfy customers- Customer satisfaction takes place when product
performance matches customer expectations.
 To ensure regular supply- Proper inventory is to be maintained to adhere
regulary supply of goods in the market.
 To gain corporate image- Improved quality of production and R& D helps
gaining corporate image in the minds of stakeholders.
 To introduce new products- With the help of R& D, a firm can develop new and
improved products.

 To expand business- A firm can expand from:-

 Local to regional
 Regional to national
 National to international

 To gain competitive advantage- Production management enables a firm to produce

quality goods on account of R&D, quality control, etc. Therefore, a firm can face
competition effectively.
 To reduce consumer complaints- Improved quality and reduction in cost helps to
reduce consumer complaints.
 To motivate employees- Effective production management helps achieve profits. A
part of the firm’s profit can be provided to the employees in the form of incentives,
bonus, etc.
 To achieve organizational objectives- Objectives such as:-
 Ensure higher returns
 To ensure good management employees relations
 To develop teamspirit
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Routing Scheduling

PRODUCTION
PLANNING &
CONTROL
PROCESS

Follow-up Dispatching
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Productivity of Production Department :-

1. Production planning and control- Effective production planning ensures
smooth control.
2. Machines and equipments-
3. Plant Layout
4. Research and Development
5. Quality Control
6. Quality Circles
7. Location Factors

 Productivity of Finance Department :-

1. Obtain funds from the right sources.
2. Fixed capital
3. Working capital
4. Proper credit management
5. Good relations with financial institutions.
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 Productivity of Human Resource Department :-

1. Recruitment and selection
2. Placement
3. Training
4. Performance appraisal
5. Promotion and transfer

 Productivity of Marketing Department :-

1. Right product
2. Right price
3. Effective promotion
4. Good after sale service
5. Marketing research
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 Value Engineering- It is a process of improving the value of a product or service

by improving its design or processes, by reducing its costs
 Quality Circles-
 Father of QC is Dr. Ishikawa Kaoru.
 It is a small voluntary group who meets regularly to identify,
analyse and solve work related problems.
 6 to 8 members in a group

 PERT & CPM-

 PERT (Programme Evaluation Review Technique) & CPM (Critical Path
Method)
 These are controlling techniques.
 It helps managers to plan, control and complete the projects on time.

 Monetary and Non-monetary Incentive Plans- Such as welfare facilities, good

working conditions, bonus, salaries, etc.
 Operations Research- Operations Research is undertaken so as to arrive at
proper decision-making, which in turn would helps to improve productivity.
 Training- It is to imparting skills and knowledge to employees.
 Job Enrichment- It refers to increase of challenging tasks, responsibilities in
job.
 Materials Management-
 To purchase quality materials
 Maintain good relations
 Maintain proper inventory level.
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 Quality Control- The main objectives of quality control includes to produce

quality goods at reasonable prices, to reduce wastages.
 Job Evaluation- It is process of evaluating the worth of a job in depth.
 Ergonomics- It refers to how a person is physically and psychologically fit for a
job.
 Performance Appraisal- It helps in improve their strengths and correct the
weakness.
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 The ABC Classification- ABC technique refers to ‘Always Better Control’. Thos
technique is broadly classified into three categories :-
 Category A items (most important or high value)
 Category B items (moderate importance or moderate value)
 Category C items (least importance and low in value)

 High, Medium and Low (HML) Classification- In this case, items are listed in the
descending order of value.
 Items above Rs. 5000 per unit as high inventory items.
 Items between Rs. 3000 to Rs. 5000 per unit as medium inventory items.
 Items below Rs. 3000 per unit as low inventory items.

 Vital, Essential and Desirable (VED) Classification-

 Vital items high stock is maintained.
 Essential items moderate stock is maintained.
 Desirable items low stock is maintained.

 Fast, Moving, Slow moving and Non-moving (FSN) Classification-

 Fast moving items are produced regularly.
 Slow moving items are required occasionally.
 Non-moving items are required rarely.

 Materials Requirements Planning (MRP)-

 Ensures materials availability and delivery to customers.
 Maintain proper levels in stock.
 Plan delivery and manufacturing activities.

 Just-in-time (JIT) Technique-

 In this case, firm holds almost no inventory at any stage of production.
 The exact required amount of inventory is purchased as and when required.
 Limited or no warehousing facilities.
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 Maximum- Minimum System- In this technique, the maximum and the

minimum limit of the inventory is maintained properly.
 MAPICS-
 It stands for Manufacturing, Accounting and Production Information Control System.
 It is a software programme.
 It is developed by IBM.
 In April 2005, MAPICS was acquired by Infor.

 CARDEX System- In this system, cards are vertically arranged in tray. The
‘Stock Control Cards’ are of different types, sizes and colours. It indicates the
position of stocks.
 Economic Order Quantity (EOQ)- It is also known as reorder quantity.