Welcome to

PRODUCTION PLANNING
AND CONTROL II

LECTURE ONE

PRODUCTION SYSTEMS AND

THEIR FUNCTIONS
 What is
production?
Production can be explained as an act
of either manufacturing or mining or
growing of goods (commodities)
generally in bulk for trade.
Production is a method employed for
making or providing essential goods
and services for consumers.
 What is
production?
It is a process that puts intangible
inputs like ideas, creativity, research,
knowledge, wisdom, etc. in use or
action.
It is a way that transforms (convert)
tangible inputs like raw- materials,
semi-finished goods and unassembled
goods into finished goods or
commodities.
What is production
system?
•Production system may be defined as, "The
methods, procedure or arrangement which
includes all functions required to accumulate
(gather) the inputs, process or reprocess
the inputs, and deliver the marketable
output (goods)."
Meaning of production
system
Production system consists of three
main components viz.,
1. Inputs
2. Conversion Process and
3. Output.
Meaning of production
system
Inputs include
1. raw-materials,
2. machines,
3. man-hours,
4. components or parts,
5. drawing,
6. instructions and other paper works.
 Meaning of production
system
 Conversion process includes
1. operations (actual production process). Operations
may be either manual or mechanical or chemical.
2. Operations convert inputs into output.
3. Conversion process also includes supporting activities,
which help the process of conversion.
4. The supporting activities include; production planning
and control, purchase of raw-materials, receipt, storage
and issue of materials, inspection of parts and work-in-
progress, testing of products, quality control,
warehousing of finished products, etc.
Meaning of production
system
Output includes
finished products, finished goods
(parts), and services.
The three components of a
production system are depicted in
this diagram.
Example
s
The examples of a production system are
as follows:
Tangible goods : Consider an example of
a manufacturing industry like a Sugar
Industry. Here, sugarcane is first used as an
input, then the juice of sugarcane is
processed through a conversion process,
finally to get an output known as a refined
sugar (used for mass consumption).
Example
sIntangible goods : Consider an example
from a service industry that of a software-
development firm or company.
Here, initially, written program codes are
used as an inputs.
These codes are then integrated in some
database and are provided with a user-
friendly interface through a conversion
process.
Finally, an output is made available in
form of an executable application
Types of Production
System
The normal way of classifying
production systems is under four
broad headings as follows.
1) Job production
2) Batch production
3) Mass production
4) Process production
Job
production
 This type of production system is concerned with
making a (usually) high-priced product to an order
which is not likely to be repeated –i.e. a one-off
job.
 This calls for skilled workers, who can be flexible
in adapting their skills to producing just what the
customer requires.
 A crucial consideration in job production is the
fact that nearly all the production costs fall to the
one job.
 Since they cannot be spread over a long run of
production, the fixing of a correct selling price
Example of Job
production
 Building a new factory
 Installing machinery in a factory
 Designing and implementing a tailor made
macine
Repairs of machine components
etc
Advantages of Job
production
The main advantages of using job production
include:
Advantages
 Product usually high quality
 Producer meets individual customer needs
Greater job satisfaction – involved in all
stages of production
Disadvantages of Job
production
The main disadvantages of using job
production include:
Disadvantages
 Cost of producing one unit or job is
higher
 Labour –intensive
 Requires investment in skills and
training
Batch
production
 This is the production of a given quantity of goods
–i.e. a number of units of a similar specification.
There may be repeat orders for these goods,
but there is no continuous fl ow of production.
Batch production resembles job production in
that these are specialist goods made to fit
customers' requirements, but differs in that the
costs of production can be spread over a number
of units, so allowing firms more scope to invest in
new machinery.
Example of Batch
production
An example of batch production might
be aircraft engines for a given type of
aeroplane.
Advantages of Batch
production
The benefits of batch production include:
 Making in batches reduces unit costs
Can still address specific customer
needs (e.g. size, weight, style)
Use of specialist machinery & skills
can increase output and productivity
Disadvantages of Batch
production
The drawbacks of batch production include:
Time lost switching between batches
– machinery may need to be reset
Need to keep stocks of raw materials. Cash
also investment in work-in-progress
 Potentially de-motivating for staff
Mass
production
This is the continuous output of uniform,
standardised products for a mass market
which offers a regular, continuous
demand.
The goods are relatively low priced and are
produced by the use of machines and
semi- skilled and unskilled labour.
A sub-type of mass production is
fl ow production.
Mass
production
This makes use of machines and labour in a
sequence called a production line. Cars for
the mass market are produced by materials
and parts moving along an assembly line until
eventually a finished car rolls off at the end.
Flow production can take many of the
features of mass production and apply them
to the manufacture of relatively high-cost
goods like cars, washing machines and TV
sets.
Examples of Mass
production
Examples include:
 Cars
 Chocolate bars and
 Electronic goods.
Advantages of Mass
production
The benefits of mass production
include:
 Labour costs are usually lower.
Materials can be purchased in large
quantities, so they are often
cheaper.
 Large number of goods are
produced.
Disadvantages of Mass
production
The main disadvantages of using mass production
include:
 Machinery is very expensive to buy, so production
lines are very expensive to set up.
 Workers are not very motivated, since their work is
very repetitive.
 Not very flexible, as a production line is difficult
to adapt.
 If one part of the line breaks, the whole
production process will have to stop until it is
repaired.
Process
production
 This refers to the process used to extract products
such as oil and gas. It makes possible a
continuous flow of production, using expensive
machinery, highly automated methods and a
mass marketing technique.
 In mass production, flow production and process
production, a small range of products is produced
in very large quantities.
Process
production
Large capital investment is involved and a mass
market is needed to absorb the goods
produced.
The type of production system will have
implications for the way in which a
production department is structured, and
certain theorists see the type of production
system as an important influence on the way
in which the whole organisation is structured.
Examples of process
production
Examples include:
 Oil refining
 Cement
The advantages of process
production
The advantages of using process
production include:
Processes can normally be automated which
reduces unit costs
 Large quantities can be produced
Ideal for products which have to be of
a consistent quality
The disadvantages of process
production
The disadvantages of using process production
include:
Heavy investment required in process design
and production equipment / facilities
Difficult and disruptive if the production
process has to be stopped
Little opportunity to make different versions
of the product
Functions of industrial enterprise

MANUFACTURING

PURCHASING PERSONNEL

POLICY
FINANCE PRODUCT
AND DEVELOPMENT
ACCOUNTING

MATERIALS
Functions of industrial enterprise
• The core area of the diagram represents the
organization’s policy making group.
• In a hierarchic triangle, this group would occupy
the apex.
• The overlapping portions of the circle denote the
co- operation needed from the two groups in
order to establish overall policy.
• The slope of each function and its relationship to
the production process are briefly discussed in
the following.
Functions of industrial enterprise
(i) Manufacturing
• A fundamental function of much production system is to
produce a physical output.
• Manufacturing includes the operations and direct support
services for making the product operation management is
concerned with production scheduling, performance standards,
method improvement, quality control, plant layout and material
handling.
• A plant service section handles shipping receiving, storing and
transporting raw material parts and tools.
• The plant engineering group is usually responsible for in-plant
construction, maintenance, design of tools and equipment and
other problems of mechanical, hydraulic or electrical nature.
Functions of industrial enterprise
(ii) personnel
• The recruitment and training of the personnel needed
to operate the production system are the traditional
responsibilities of the personnel function.
• Along with it, this department takes care health, safety,
wage administration of the employees.
• Labour relation and employee services and benefits are
increasingly important.
Functions of industrial enterprise
(iii) Product development
• Many organizations give major emphasis on product
development because the ultimate profit of any
organization depends primarily on the nature/quality
of product.
• The product must be customized.
Functions of industrial enterprise
(iv) Marketing
• Many ideas of product development comes through
the marketing function.
• Selling is the primary interest of marketing.
• Sales forecasts and estimate of the nature of future
demands is also performed by this department.
• Contact with customers provide feedback about the
quality expected from the firm and opinion on how
well the products meet quality standard.
Functions of industrial enterprise
(v) Finance and accounting
• Internal financing includes reviewing the budgets for operating
sections, evaluating of proposed investments for production
facilities and preparing balance sheet.
• Besides these the other responsibilities is to see how well the
firm is scoring in the business competition game.
• In this business game analogy the accounting functions are
collection of cost data for materials direct labour and overhead.
• Special reports are prepared regarding scarp, parts and finished
goods inventories, pattern of labour hours and similar data
applicable to production activities.
 Functions of industrial enterprise
(vi) Purchasing
• In a narrow sense, purchasing is limited to accounting
materials from outside sources.
• But while carrying out this activity, it requires to
investigate the reliability of vendors, type of materials
needed, co-ordinating material purchase volume with the
requirement as per schedule, discovering new material
and process.
• The purchasing function serves the other functional
areas, overlap sometimes with inventory control,
material inspection, shipping and receiving, sub-
contracting and internal transportation.
Functions of production process
Customer

Distribution Sales

Another way is to
Quality group functions Finance
Control
according to their
relative position in a
production process. the
Manufacturing
sequential arrangement Engineering
is shown herein

Procurement Production
Planning
Inventory Control
Cntrol