Production System

Unit-1

Presented by:
RITU JAIN
Assistant Professor
 Production
• Production is the transformation of input into the
output of a commodity ins specific period of
time with the given technology.
• Production implies the creation of form, place
and time utilities of different usable commodities
and services.
• It deals with the conversion of raw materials into
semi finished and finished products with the help
of certain production processes.
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 Production Function: Input-Output Model

Inputs: Human,
Transformation Output: Goods
Financial, Function and Services
Technologies

Control

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 Factors of production
1. Land- Land includes not only the land used for agricultural or industrial
purposes, but also all the natural resources taken from above or below the
soil.

2. Productivity of Land:- Following factors determine productivity

of land:-
a. Natural endowment
b. Human factors-knowledge, training and experience
c. Alternative uses
d. Availability of capital
e. Techniques of agriculture
f. Mechanisation and automation

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3. Labour:- According to Marshall, “ By labour meant the
economic work of man, whether with the hand or with the head.”
4. Factors affecting productivity of labour:-
a)Education and training
b)Climate
c)Level of wages
d)Standard of living
e)Managerial ability
f)Types of supervision
g)Hours of work
h)Working conditions
i)Nature of work
5. Capital :- According to Marshall, “capital consists of those kind
of wealth, other than free gifts of nature, which yield income.”
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 According to F.H Knight, “ An Entrepreneur is a person who
6.Entrepreneur-:
performs dual function of risk taking and control.”

7. Role and functions of Entrepreneur

a) Innovation
b) Bearer o risk and uncertainty
c) Promoter
d) Supplier of capital
e) management
8. Qualities of Entrepreneur
f) Foresightedness
g) Open mind
h) Adaptability
i) Self confidence
j) Knowledge of business
k) Innovative attitude
l) Leadership quality
m)dependability

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 Production Management
• According to Elwood S. Buffa, “Production
management deals with decision making related to
production processes, so that resulting goods or
services is produced according to the specification, in
the amount and by the schedule demanded, and at
minimum cost.
• In accomplishing these objectives, production
management is associated with two broad areas of
activities: the design and control of production
system.
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 Importance of Production Management

• It covers all the activities of procurement, allocation

and utilisation of resources like materials, energy,
labour, plant and machinery etc.
• A good production system must be economical and
efficient to produce goods and services of higher
quality at a lower cost in order to face the market
competition and to ensure reasonable rate of return on
the capital.
• The goods and services produced must be capable of
satisfying the demands of the customers.
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 Objectives of Production management

• The aim of any production system is to

produce economically the goods and services
required by the customers.

• In order to achieve this aim, it is essential to

plan, organise, direct and control the
production system effectively and efficiently.

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Functions and Scope of Production System

• Design of product
• Design of production system
• Production planning and control
• Selection of location
• Layout of plant
• Selection of plant and equipment
• Research and development

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 Production System
• Production system is the framework within which the
conversion of input into output occurs.

• Types of production system:

– Process production or continuous manufacturing
– Job production
– Intermittent production

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 PROCESS PRODUCTION
(CONTINUOUS MANUFACTURING)
• Continuous production system, however, is
very rigid and if there is a fault in one
operation, the entire process is disturbed. Due
to continuous flow, it becomes necessary to
avoid piling up of work or any blockage on the
line. Unless the fault is cleared immediately, it
will force the preceding as well as the
subsequent stage to be stopped.

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 Suitability:
• Continuous production system is best suited to organisations
which intend to produced a limited variety of products on a
large scale.
• The heavy fixed costs of specialised equipments that are
utilised for operating at low cost per unit can be distributed
over a high volume of output.
• This process can be applied to those industries which satisfy
the following requirements:
– Uniform demand
– High volume of production
– Proper balancing
– Material flow
– Preventive maintenance
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 Job Production
• Job or unit production involves the procedure of
manufacturing a product according to a specific
customer order.
• Job production involves comparatively small
investment in machinery and equipment. It is
flexible and can be adapted easily to changes in
product design. A fault in one operation does not
result into complete stoppage of the entire
process.
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 Intermittent Manufacturing
• This is mixture of the first two technologies and
frequently used by mass production firms.
• Intermittent Manufacturing is also known as
large batch production.
• Intermittent system is much more complex than
continuous production because every product
has to be treated differently under the constraint
of limited resource.

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 Batch Production
• The work on any product is divided into few
operations and each operation is completed for
whole lot before proceeding to the next operation.
• Batch production is a mixture of mass production
and job production.
• The main problem in batch production is the idle
time between one operation and the other. The
work has to wait until a particular operation is
carried out on the whole batch.
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 JOAN WOODWARD
• Woodward categorized production systems
under three heading:
– Unit production(small batch)
– Mass production(large batch)
– Process production

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 Summary
• Production management is concerned with
decision making to production processes, so as to
ensure that output is cost effective, meeting the
delivery schedules, confirming to quality and
achieving customer satisfactions.
• Production management is concerned with the
decision making pertaining to production
processes, while Operation management manages
the process of conversion of input to output.

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 Productivity
• In a broad sense, the term productivity represents
goods and services produced in relation to the
resources utilised in their production.
• Productivity is defined as the ratio of output to input.
Productivity = output/input
P=O/I
Where output means goods and services produced
and input represents capital, labour, materials,
machines, energy, management etc..

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 Importance of Productivity
• Increase in production
• Reduction in costs
• Increase in profits
• Competitive advantage
• Better quality of life

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Factors of Influencing Productivity
• Internal factors which could be controlled at
the level of the enterprise
• External factors which are outside the control
of the management of the enterprise.

Factors Influencing Productivity

Internal factors External factors

or controllable or Non-
factors Controllable
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Internal factors:
• Technological factors
• Human Factors
– Ability to work
– Willingness to work
• Financial Factors
• Material and Energy

External Factors:
• Natural factors
• Sociological factors
• Government policy
• Managerial talent
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 Causes of Poor Productivity
• Improper design of products.
• Incorrect quality standards
• Improper technology
• Improper process control leading to wastage and
reprocessing
• Improper layout
• Poor working conditions
• Poor quality of materials
• Break downs and accidents
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 Increasing Industrial productivity
• Improved raw material
• Better technology
• Scientific selection and training of workers
• Work study
• Research and development
• Good working conditions
• Provision of incentives
• Harmonious relations
• Workers participation in management
• Quality circle
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 Form of industrial Enterprises

1. SOLE TRADER
2. PARTNERSHIP
1. DEPARTMENTAL
3. JOINT HINDU
ORGANISATION
FAMILY
2. GOVERNMENT JOINT SECTOR
4. JOINT STOCK
COMPANY
COMPANY
3. PUBLIC CORPORATION
5. COOPERATIVE
SOCIETY

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 Sole Proprietorship
• A sole proprietor is a person who carries on
business exclusively by and for himself. He is
not only the owner of the capital of the
undertaking, but is usually the organiser and
manager and takes all the profits or
responsibility for losses.
-James Stephenson

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 Joint Hindu Family
• If the business set up by a person is carried on
by male members of his family after his death,
it is called joint Hindu family business.
Partnership
Two or more individual may form a
partnership by making a written or oral
agreement that they will jointly assumes full
responsibility for the conduct of the business.

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 Cooperative Society
A Co-operative society is a voluntary association of
persons of moderate means, who unite together to
protect and promote their common economic and
social interest.
Joint Stock Company
L.H Haney has defined joint stock company as
“voluntary association of individuals for the profits,
having a capital divided into transferable shares, the
ownership of which is the condition of membership.”

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 Private Limited Company
• A private company means a company which:
a) restricts the right of members to transfer its share;
b)has a minimum of 2 and a maximum of 50
members, excluding the present and past employees;
c)does not invite public to subscribe to its share
capital; and
d)Must have a minimum paid-up capital of Rs. 1 lakh
or such higher amount which may be prescribed
from time o time .

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 Public Limited Company
• As per the Indian companies Act, a public company is
one which:
a) has a minimum paid up capital of Rs. 5 lakh or a
higher amount which may be prescribed from time to
time;
b) has a minimum of 7 members and no limit on
maximum member;
c) has no restriction on transfer of share; and
d) is not prohibited from inviting the public to subscribe
to its share capital or public deposits.
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THANK U

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