Introduction

Production Function
Input/Output Relationship
Involvement of Other Functions
Internal Customer Concept
Different form of Production
Extraction/Separation
Assembling
Types of Production System
Continuous/Mass, Job/Unit, Intermitt/Batch

1
 Product Selection
Product Selection Process
factors to be considered
Market Approach
market / technology / interfunctional
Process Selection
fully / semi automated / manual
Target Market
price / quality / quantity
Productivity
2
 Productivity and Profit
Comparison between increasing sales vs
decreasing cost
Variable Before After 10% After 10%
sales increase decrease in
cost
Sales 100 110 100

Variable cost 70 77 63

Fixed cost 20 20 20
3
 Productivity Measurement
Calculation of Productivity
divide the output by the input
Type of Productivity
multi factor productivity
labour productivity
capital productivity
material productivity, etc.

4
 Productivity
Factors Affecting Productivity
product
process
workforce
external factors (PEST)
capacity and inventory

5
 Factors affecting Productivity
Product
value engineering
product diversity
research and development

6
 Productivity
Basic Steps in Product Selection Process
idea generation
product selection
preliminary product / process design
prototype construction
testing
final product / process design
starting production
7
 Productivity
Dynamic Model of Product Process Innovation
two axis to be considered
rate of innovation
stage of development

8
 Productivity
Three Stages of Product / Process Development
stage 1
product – need stimulated
process – output rate stimulated
stage 2
product / process – technology stimulated
stage 3
product / process – cost stimulated

9
 Factors affecting Productivity
Process
process selection
automation
process flow
layout

10
 Factors affecting Productivity
Example in Process Selection
Option 1 – Machine Teller
Investment – $ 10,000
Variable cost – $ 100/month
8000 transaction per year
Option 2 – Human Teller
Initial training cost – $ 700
Variable cost – $ 700/month
6000 transaction per year
What is the factor to be considered????? 11
 Factors affecting Productivity
Workforce
selection and placement
training
job design
organization structure
supervision
rewards
goals (MBO)
unions 12
 Factors affecting Productivity
External
government investment policy
government regulations
competition
customer demand
economical situation
political situation
technology

13
 Factors affecting Productivity
Capacity and Inventory
capacity planning
inventory
purchasing

14
 Productivity Improvement
Factors to be Considered
competitors productivity
how competitors achieve productivity
is there any universally accepted measure
how labour intensive should be
can the productivity of creative work be quantified
who is in charge of productivity improvement

15
 Productivity Improvement
Some Suggested Steps
develop productivity measures at all levels
set productivity goals (SMART)
develop plans to meet the goals
implement the plans
measure the results and revalidate the goals

16
 Production Systems
Continuous / Mass Production Systems
produce standardized products
standard set of process and operation
sequence in anticipation of demand.
less work in process (wip) inventory
high product quality but involves high capital
investment in machinery and equipment.
high rate of production – not necessary to
intervene once the production has begun
17
 Production Systems
Continuous / Mass Production Systems
product is manufactured for sufficiently long time,
machines layout in order of processing sequence,
most of the equipment’s are semi automatic or
automatic in nature,
material handling is also automatic (such as
conveyors),
semi-skilled workers are normally employed,
cost of production per unit is very low, etc. .

18
 Production Systems
Job or Unit Production Systems
production as per customer's specifications.
production of large number of batches
each batch or order comprises of a small lot of
identical products and is different from other batches.
requires comparatively smaller investment in
machines and equipment.
flexible and can be adapted to changes in product
design and order size without much inconvenience.

19
 Production Systems
Job or Unit Production Systems
suitable where heterogeneous products are
produced against specific orders.
products are made to satisfy a specific order.
order may be produced- only once or at irregular
time intervals as and when new order arrives or at
regular time intervals to satisfy a continuous demand.
machines and methods employed should be
general purpose as product changes are quite frequent.
man power should be skilled enough to deal with
changing work conditions.
20
 Production Systems
Intermittent or Batch Production Systems
production of different types of products in small quantities
(batches)
batch contains the similar products but in small quantity
used to meet a specific order/continuous demand. can be
manufactured either- only once or repeatedly at irregular time
intervals as and when demand arise or repeatedly at regular time
intervals to satisfy a continuous demand
goods may be produced partly for inventory and partly for
customer's orders. For example, components are made for inventory
but they are combined differently for different customers. e.g.
automobile plants, printing presses, electrical goods plant are
examples of this type of manufacturing. Characteristics of
Intermittent/ Batch Production: a) As final product is somewhat 21
standard and manufactured in batches, econo
 Production Systems
Intermittent or Batch Production Systems
goods may be produced partly for inventory and
partly for customer's orders
Ex: components are made for inventory but
they are combined differently for different customers.
automobile plants,
printing presses,
electrical goods
final product is standard and manufactured in
batches
22
 Production Systems
Intermittent or Batch Production Systems
final product is somewhat standard and
manufactured in batches
economy of scale can be availed to some extent.
machines are grouped on functional basis similar
to the job shop manufacturing.
semi-automatic, special purpose automatic
machines are
labor should be skilled enough to work upon
different product batches
in process inventory is usually high 23