QUESTION 1

A) Using an example you are familiar with and a diagram to illustrate your answer
describe the structure of a productive (production) system
Production system is a system whose function is to transform an input into a desired output by
means of w production process and of resources. The definition of a production system is thus
based on four main elements: the input, the resources, the production process and the output.
Production of potatoes crisps.

Production process, involves

Quality control to
Raw Material cleaning, chopping and
cooking of the potatoes this ensure KEBS standards
(Potatoes) are met
is done by machine with the
help of human capital

Delivery to various Packaging of potato

wholesale and retail crisps in various sizes
outlets

The production system transformations a set of inputs i.e. Materials, Labor, equipment to useful
outputs. The output of a production system are both for example fast foods

B) Distinguish between the batch and continuous production systems

Batch Production System
Product is manufactured in different groups as per the orders received from the customer or
based on the product continuous demand. It’s mainly used in industries such as Bakery shop,
steel manufacturing and medicine companies as the product variety is large and demand is
variable. Required units of the product is known and produced in a single batch.
Example; Ramtons manufactures different types of electronic product. There are different variant
of the same product that are being produced therefore it produces these variant of a single
product in different batches through batch production i.e. one type of Ramtons fridge will be
manufactured first and after that the next type of fridge is produced.
Continuous Production System
It is considered as a primary production system and includes a continuous flow of materials
physically without any interruption the product is highly standardized, materials and products are
produced in continuous endless flow rather than in batches.
Example; in different industries such as Sugar, Milk, Paper, Oil refineries i.e. KAPA etc. adopt
continuous Production system. The continuous production system is further categorized into two
categories i.e.:
I. Mass Production System- This includes producing standardized components of a
product in bulk or a large scale. Economies of scale can be achieved through mass
production systems due to a large volume of output. Uniform and high-quality products
are manufactured due to the mechanization and standardization process. For example,
Coca-Cola- This mass production method being used by Coca-Cola is due to the wide
variation of products of the company that are being distributed in bulk orders. The
company has a different range of products in its distribution range such as Diet Coke,
Coke, Flavored soft drinks, Bottled water, etc. So, the production of such a huge range of
products can be best achieved through mass production and a continuous production
system.
II. Process Production System- Continuous production is there in this production system
due to uniformity and standardization in the sequence of operations. Also, machines that
are being used in the manufacturing process are automated and highly sophisticated.
Process production is used while processing certain materials in bulk quantity. For
example, different industries that are based on process production include Milk diaries
and Fertilizer plants as these industries work on highly automated systems. The process
of this system includes taking output (finished goods or services) of one process as an
input (raw material) of the next process till the end of the manufacturing or production
process. Also, in most industries, a single main raw material is used in the transformation
process to produce various products at different levels of production or operation. For
example, Crude oil is transformed into different finished products such as gasoline,
kerosene, and other related products.

C) Outline any 7 characteristics of a production system

Feedback ~ there exists feedback i.e. from customers about the activities which is essential to
control and improve system performance.
Objective ~ Production is an organized activity therefore every production system has an
objective.
High Volume Output ~ Continuous Production System are designed to produce goods or service
in large quantities. They are able to produce high volume output efficiently and consistently.
Standardization ~ Continuous Production System majorly involves production of standardized
goods. This implies that the product are uniform and consistent in terms of quality, aids and
specification. This aids in streamlining the production process.
Economies of Scale: Continuous Production System benefits from the economies of scale.
Through the production of goods or services in bulk, continuous Production system can take
advantage of cost savings associated and optimized production processes.
Automation and Technology: Continuous Production system, it majorly relies on automation and
technology to carry out the production process. Machines and equipment are used to automate
tasks, reduce manual labor and increase efficiency.
Continuous Flow: This implies that there is constant flow of materials, resources and products
throughout the production line. Production process is designed to maximize production.

D)Highlight any four distinguishing features of products and services.

PRODUCT
1. Tangible, Durable products: Manufacturing
organizations transfer tangible inputs into
some tangible outputs i.e. steel, soap. Other
inputs such as labor skills, capital.
2. Output can be inventoried.
- Durable goods can be kept for longer time.
These goods can be transported in
anticipation of future demand.
3. Low customer Involvement
- Most of the customer have little or no
contact with the production organization.
4. Capital Intensive.
-Manufacturing firm producing goods capital
i.e. automobile firm.
SERVICES
1. Intangible perishable products service
providing organizations though transform a
set of input set of output, they do not produce
a tangible output. Example mail service,
restaurant, Health Care, hair care.
2. Output can't be inventoried.
- Service can't be pre-produced. For example
getting fast food from a fast food restaurants
or getting treatment from hospital
3. High customer Involvement.
- Service providing organizations, customer
are directly involved for example student in
an educational institution, patients in hospital.
4. Labor Intensive.
-Service provider require less capital
investment but more of labor i.e. Hospital.
QUESTION TWO
a) Describe the concept of productivity.
Productivity is a relationship between the output (product/service) and input (resources
consumed in providing them) of a business system. The ratio of aggregate output to the
aggregate input is called productivity.
Productivity = output/Input
For survival of any organization, this productivity ratio must be at least 1. If it is more than 1,
the organization is in a comfortable position. The ratio of output produced to the input resources
utilized in the production.
b) Highlight any 6 benefits a firm can derive from higher productivity
Benefits derived from higher productivity are as follows:
 It helps to cut down cost per unit and thereby improve the profits.
 Gains from productivity can be transferred to the consumers in form of lower priced Products
or better quality products.
 These gains can also be shared with workers or employees by paying them at higher rate.
 A more productive entrepreneur can have better chances to exploit expert opportunities.
 It would generate more employment opportunity.
 Overall productivity reflects the efficiency of production system.
 More output is produced with same or less input.
 The same output is produced with lesser input.
 More output is produced with more input.
 The proportional increase in output being more than the proportional increase in input.
c) Describe the techniques a firm can employ to improve the productivity of its productive
system
Higher productivity in organization leads to national prosperity and better standard of living for
the whole community. The methods contribute to the improvement of productivity are method
study and work measurement by reducing work content and Ineffective time.
Work content means the amount of work “contained in” a given product or process measured in
man-hour or machine-hour. Except in some cases like in processing industries, actual operation
times are far in excess of the theoretical minimum.
Ineffective time is the time for which the worker or machine or both are idle due to the
shortcomings of the management or the worker.
d) Njeri owns a small firm in Ruiru producing various types of flavors for the Kenya market in
2022 her firm saw a significant change from what they were by in 2021 as shown in the table
below.
OUTPUT 2021 2022
Sales volume (Millions of 22,000. 35,000
Ksh)
INPUT
Labor 10,000 15,000
Raw materials and supplies 8,000 12,500

Determine the following productivities for 2021 and 2022 and interpret the result with respect to
the productivity of the firm between the 2 years compares.
i. Partial Labor Productivity
Partial labor productivity= Sales volume ÷ Labor

2021 2022
22,000 ÷ 10,000 35,000 ÷15,000
=2.2 =2.33

ii. Partial Raw material and supplies productivity.

Partial raw materials & supplies productivity = Sales volume ÷ raw materials and
supplies

2021 2022
22,000 ÷ 8000 35,000 ÷12,500
=2.75 =2.8

iii. Total Productivity.

Total Productivity = sales volume ÷ Raw materials & supplies
2021 = 22000 ÷ (10,000 +8000)
= 1.1
2022 = 35,000 ÷ (15,000 + 12,500)
= 1.25
INTERPRETATION
1. Partial labor productivity increased from 2.2 in 2021 to 2.33 in 2022 indicating the firm
became more efficient in utilizing labor to produce products in 2022.
2. Partial raw materials and supplies productivity increased from 2.75 in 2021 to 2.8 in 2022.
This shows efficiency of use of raw materials and supplies in the production process.
3. Total productivity increased from 1.1 in 2021 to 1.25 in 2022. This indicates overall
improvement in the firm’s efficiency in utilizing both labor and raw materials to produce sales
volume.
QUESTION THREE
Describe the following dimensions of product design strategies stating clearly the meaning,
the objective and the requirements of each
Product Positioning Strategy: Is Placing a brand in that part of the market where it will have a
favorable reception compared with competing brands. • For Example The marketers of
“SUNLIGHT” soap wants the people to think “SUNLIGHT” when they think soap. The
marketers of “Colgate” want the consumers to think “Colgate” when they think toothpaste etc.
Objective:
In the case of positioning single brand:
 To position the product in the market so that it stands apart from competing brands.
 To position the product so that it tells customers what you stand for, what you are, and
how you would like customers to evaluate you.
In the case of positioning multiple brands:
 To seek growth by offering varied products in differing segments of the market.
 To avoid competitive threats to a single brand.
Requirements:
 Use of marketing mix variables, especially design and communication efforts.
Successful management of a single brand requires positioning the brand in the market so that it
can stand competition from the toughest rival and maintaining its unique position by creating the
aura of a distinctive product.
Successful management of multiple brands requires careful positioning in the market so that
multiple brands do not compete with nor cannibalize each other. Thus it is important to be careful
in segmenting the market and to position an individual product as uniquely suited to a particular
segment through design and promotion.
Expected Results:
 Short term success
 Meet as much as possible the needs of specific segments of the market
 Limit sudden changes in sales
 Make customers faithful to the brands.

Product Re-Positioning Strategy: Is Reviewing the current positioning of the product and its
marketing mix and seeking a new position for it that seems more appropriate.
Objectives:
 To increase the life of the product.
  To correct an original positioning mistake.
Requirements:
 If this strategy is directed toward existing customers, repositioning is sought through
promotion of more varied uses of the product.
 If the business unit wants to reach new users, this strategy requires that the product be
presented with a different twist to the people who have not been favorably inclined
toward it. In doing so, care should be taken to see that, in the process of enticing new
customers, current ones are not alienated.
 If this strategy aims at presenting new uses of the product, it requires searching for latent
uses of the product, if any. Although all products may not have latent uses, there are
products that may be used for purposes not originally intended.
Expected Results:
 Among existing customers: increase in sales growth and profitability.
 Among new users: enlargement of the overall market, thus putting the product on a
growth route, and increased profitability.
 New product uses: increased sales, market share, and profitability.
Product Overlap Strategy: Is Competing against one’s own brand through introduction of
competing products, use of private labeling, and selling to original-equipment manufacturers.
Objectives: Product overlap strategies can include selling similar goods in different markets,
regions or international countries.
 To attract more customers to the product and thereby increase the overall market.
 To work at full capacity and spread overhead.
 To sell to competitors; to realize economies of scale and cost reduction.
Requirements:
 Each competing product must have its own marketing organization to compete in the
market.
 Private brands should not become profit drains.
 Each brand should find its special niche in the market. If that doesn’t happen, it will
create confusion among customers and sales will be hurt.
 In the long run, one of the brands may be withdrawn, yielding its position to the other
brand
Expected Results:
 Increased market share.
 Increased growth.
Product Scope Strategy: The product-scope strategy deals with the perspectives of the product
mix of a company. The product-scope strategy is determined by taking into account the overall
mission of the business unit. The company may adopt a single-product strategy, a multiple-
product strategy, or a system-of-products strategy.
Objectives:
 Single product: to increase economies of scale by developing specialization.
 Multiple products: to cover the risk of potential obsolescence of the single product by
adding additional products.
 System of products: to increase the dependence of the customer on the company’s
products as well as to prevent competitors from moving into the market.
Requirements:
 Single product: company must stay up-to-date on the product and even become the
technology leader to avoid obsolescence.
 Multiple products: products must complement one another in a portfolio of products.
 System of products: company must have a close understanding of customer needs and
uses of the products.
Expected Results: Increased growth, market share, and profits with all three strategies. With
system-of-products strategy, the company achieves monopolistic control over the market, which
may lead to some problems with the Justice Department, and enlarges the concept of its
product/market opportunities.
Product Elimination Strategy • Definition: Cuts in the composition of a company’s business unit
product portfolio by pruning the number of products within a line or by totally divesting a
division or business.
Objectives:
 To eliminate undesirable products because their contribution to fixed cost and profit is
too low.
 Eliminate Products that its future performance looks grim, or because they do not fit in
the business’s overall strategy.
 The product elimination strategy aims at shaping the best possible mix of products and
balancing the total business.
Requirements:
No special resources are required to eliminate a product or a division. An in-depth analysis must
be done to determine:
 The causes of current problems;
 The possible alternatives, other than elimination, that may solve problems (e.g., Are any
improvements in the marketing mix possible?);
 The repercussions that elimination may have on remaining products or units.
Expected Results:
 In the short run, cost savings from production runs, reduced inventories, and in some
cases an improved return on investment can be expected.
 In the long run, the sales of the remaining products may increase because more efforts are
now concentrated on them.
REFERENCES
1. Production Systems: Planning, Analysis & Control: Riggs, J.L. (4th Edn.) John Wiley & Sons
2.
2. Modern Production/Operation management: Buffa, E.S. & Sarin, =, K. (8`" Edn.) John Wiley
& Sons.
3. Production & Operations Management: By Panneer saivem, R. (2' 1 Edn.) PHI 4. Production
& Operations Management: By Chary, S.N.(TMH)