Production and Operation management | Operations Management | Output (Economics)

Production & Operations Management

What is Production ?
• According to Elwood Butta “production is a process by which goods or services are created”.

Production involves the step by step conversion of one form of material into another through chemical or mechanical process with a view to enhance the utility of the product or services.


What is Production management ?
• “Production management deals with the decision making related to production process of that the resulting goods and service is produced according to specifications in the amounts and at the scheduled demanded and at minimum cost” – Elwood Butta.
• Production/Operations Management is the systematic direction and control of the process that transforms inputs into finished goods or services.


Characteristics/ features of production system? • 1. Production is an organized activity. • 2. The system transforms the various inputs into useful outputs. • 3. Production system does not operate in isolation from the other organizational systems. • 4. There exists a feed back about the activities which is essential to control and improve system performance.


A Production system
Inputs - Land - Labour -Capital Management
Output  Goods  Services

Conversion Process

System Approach

• Inputs
• Materials, i.e. the physical items consumed or converted by the system, e.g. raw materials, fuel, indirect materials. • Capital, i.e. the physical items equipment and facilities, used by the system, e.g. plant, tools, vehicles, buildings. • Human Resources, i.e. the people, workers and managers, who provide or contribute to the operation of the system, without which neither machine nor materials are effectively used.

System Approach

• Processing ( Conversion )
• Processing refers to transformation of any input into output by use of any mechanical or chemical process. • It includes use of tools, machines and other objects for molding, bending, melting or any other transformation of input material. • For Example : Assembling parts of a car is referred as processing.

System Approach

• Output • Output refers to the final product of a production system. It may be a finished good or may be any service produced by a service organisation • For Example : A complete car coming out of a production plant is called the output of the company, same way final service rendered by a bank is called its output

System Approach

• Following are the objectives of Productions Management. 1. To reduce Cost of Production 2. To improve efficiency of production system 3. To improve efficiency of workforce 4. To improve quality of products 5. To minimize wastage of production


• Following are the main functions of Productions Management • 1.Production planning • 2. Production control • 3. Plant Location • 4. Plant layout • 5. Method study • 6. Inventory control • 7. Quality control


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