importance of production the economy begins with production. consumers need products/services to...
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PRODUCTION AS AN ECONOMIC ACTIVITY
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Importance of ProductionThe economy begins with production.Consumers need Products/Services to satisfy
their needs and wants.Businesses also need Products/Services
To use in/with their own Products/Services.To resell to consumers.
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The three categories of products used by business and consumers are:Natural Resources – raw materials supplied
by natureAgricultural Products – crops and animals
grown my farmersProcessed Goods – products that have been
changed in form to increase their value and usefulness
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The following types of businesses make products:Producers – develop products to sell to other
businesses or consumersExtractors – obtain natural resources, such as
water, oil, coal, and timber, from the earth for processing and use
Farmers – tend land and other natural resources to grow crops and livestock that are later sold and processed
Manufacturers – obtain materials from other producers and convert them into products for sale to consumers and other businesses
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Types of ProductionExtraction and
CultivationObtaining
products from nature or using natural resources to grow
ProcessingChanging and
improving the form of another product
ManufacturingCombining raw
materials and processed goods into finished products
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Types of Manufacturing ProceduresMass
Production The process of
using assembly activities to produce large quantities of identical products
Examples: Krispy Kreme
Donuts Maybelline
Lipstick Nike sneakers
Custom Manufacturing The process of
producing a specific and exclusive product for a customer
Examples: Ceramics Prosthetic
Limb Signs
Material Processing
The process of changing raw materials to another form in order to be consumed or used to make other products
Examples: Paper Soap Glass Plastic Steel Cement
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Continuous Process Improvement (CPI)
The purpose of CPI is to make sure manufacturing processes are completed as effectively and efficiently as possible.
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Continuous Process Improvement (CPI)Six Steps:1. Involve everyone.2. Identify process activities.3. Establish quality performance
standards.4. Select measurement tools.5. Monitory performance continuously6. Improve process quality.
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Production and Manufacturing PlanningProduction and manufacturing involve the following activities in order to produce products:
Product DevelopmentProduction PlanningInventory Management
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Production DevelopmentImproving an existing product or developing new kinds of products
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Product ResearchPerformed by engineers and other scientists to develop new products or to discover improvements for existing products.
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Applied ResearchMarketing research that studies existing products to develop design improvements or new products.Example: Engineers working for an automobile manufacturer will study the current designs to improve the efficiency of engines or increase passenger safety.
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Pure ResearchDiscovers new solutions to problems – done without a specific product in mind.Example: Scientists working for drug manufacturers study diseases and immune systems of the body. Their goal is to uncover treatments and cures.
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Product DesignTurning the idea into a product that can be
made and sold with a profit.Creating models and testing them to come up
with the best possible design.Determining all the materials and parts
needed for the final product.Determining the cost of making the product.Determining the selling price.
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Production Planning
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Production Process consists of activities, equipment, and resources needed to manufacture products.
Production Resources consists of machines, tools, and other equipment needed for production.
Personnel consists of employees and skills needed for production
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Inventory ManagementA detailed account of a company’s materials, supplies, and finished products.
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Inventory ManagementMaintains the supply of all resources needed.Keeping records of the cost of all resources
used in production.Ensure that suppliers deliver orders on time
and in the correct quantities and price.Maintaining adequate storage space.Ensuring that materials are safe and secure.Keeping accurate product inventory in order
to make sure orders can be filled.
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Business Operations
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Common Business Operations:Facilities ManagementLogisticsSchedulingSafety and Security
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Facilities ManagementBuildings are one of the largest investments
of a business.House the work and workersProvide space for all of the business operationsProvide space for storage of materials,
supplies, and productsFacilities management protects the
company’s investment.
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Making Economic Decisions About the BuildingsBuy existing buildingsBuilding new buildingsRent buildingsStudying long-term plans of the companyAre current building adequate, is more space
needed, are some facilities no longer needed or out-of-date?
Purchase land
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Building Maintenance and RepairScheduled cleaningsPaintingCarpetsUpdate EquipmentExterior Maintenance
LandscapingRepairs to facilities and equipment
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Energy and Environmental ManagementEnergy costs - rapidly growing expenseNeed a ready supply of electricity, gasoline,
heating oil, and waterKeep utility costs under controlWays to conserve energy resourcesMonitor quality of air, building temperature,
and other environmental factors to maintain a healthy and productive workforce
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LogisticsManaging the acquisition, movement, and storage of
supplies, materials, and finished products in a business.
Supply Chain Management – newer term for logisticsAll of the businesses involved from the time raw
materials are obtained until finished products are sold.Major Activities
Locating sources of suppliesPurchasingTransportationSales
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LogisticsResponsible for effective communication and
information among everyone in the supply chain
Just-in-TimeGoods arrive when needed for production, use,
or sale rather than sitting in storageRequires careful planning and coordination
among supply chain members.Requires effective information system
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SchedulingDetermining the activities that need to be completed,
the people who will complete the work, and the resources needed for the task.
Scheduling EmployeesRight number of Full-Time, Part-Time, Temporary
EmployeesThe right number of employees to complete the
scheduled workRight number of employees with the right skillsHire more/Reduce number of employeesTrainingDetermining daily/weekly work scheduleSchedule carefully so as not to exceed the budget but
still get the work finished
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Safety and SecurityProtecting people and propertySecurity
Study the resources and activities of a business to identify potential security problems
Prepare security plans and procedures to prevent problems whenever possible
SafetyPrevent accidents and injuriesMaintain safe work areas and work proceduresProvide safety training and enforce rules and regulations
designed to reduce accidentsPlace safety posters around the workplaceRecognize work units that have a record of no accidents or
injiries for a period of time
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Business Operation ToolsManagement ToolsTechnology Tools
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Management ToolsOperational Plan – identifies how work will
be done, who will do it, and what resources will be needed.
Operating Budget – is a detailed financial plan for a specific area of the business.
Schedule – is a time plan for completing activities.
Procedures – are lists of steps to be followed for performing a particular work activity.
Standards – are specific measurements against which an activity or result is judged.
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Technology ToolsSupply Chain Management Software – allows cooperating
companies to share order, production, and shipping information, track products, and exchange customer data.
Collaboration Software – also called groupware, provides real-time communications capabilities by voice, text, and video; allows team members working at their own computers from anywhere in the world to view the same documents on their computer screens and work on them as a team.
Computer Security – provides access and restrictions, usage data, privacy, and virus protection for computers and networks.
Inventory – helps the managements of sales, purchases, and payments; tracks production, usage, and sales levels; and even prints bar codes.
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Technology ToolsProject Management – Keeps track of project calendars,
tasks, to-do lists, work assignments, and project resources.Budgeting – Automates budget planning, compares budgets
from one time period to another, and coordinates budgets among departments.
Document Management – controls the production, storage, and managements, and distribution of electronic documents
Manufacturing Automation – monitors and often controls manufacturing machines, checks for errors and defects, and reports on production levels.
Scheduling – manages employee, facility, resource, and production scheduling. Allows easy review of schedules by all participants as well as quick updating.