PRODUCTION MANAGEMENT

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INTRODUCTION

The very essence of any business is to cater needs of customer by providing services and goods, and in process create value for customers and solve their problems. PRODUCTION PRODUCTION MANAGEMENTMANAGEMENT talks about management concepts in creation of goods and services.

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DEFINITION OF PRODUCTION MANAGEMENT

Production management is the process, which combines and transforms various resources used in the production subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level.

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The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management.

E.S. Buffa defines production management as, “Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.”

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OBJECTIVES OF PRODUCTION MANAGEMENT

The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’.

1. Right Quality

2. Right Quantity

3. Right Time

4. Right Manufacturing Cost

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DEFINITION OF PRODUCTION

Production is defined as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user.” Thus production is a value addition process. At each stage of processing, there will be value addition.

Edwood Buffa defines production as ‘a process by which goods and services are created’.

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Inputs:Inputs:

• Men• Materials• Machines• Information• Capital

• Men• Materials• Machines• Information• Capital

Transformation Process:Transformation Process:

• Product Design• Product Planning• Production Control• Maintenance

• Product Design• Product Planning• Production Control• Maintenance

Outputs:Outputs:

• Product• Services• Product• Services

Continuous:Continuous:

• Inventory• Quality• Cost

• Inventory• Quality• Cost

EnvironmentEnvironment Feedback InformationFeedback Information

Fig. 1.1 Schematic Production SystemFig. 1.1 Schematic Production System

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EXAMPLES OF PRODUCTION

Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.

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PRODUCTION FUNCTION

Factors of production Factors of production means inputs and finished goods means output. Input decides the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process

such input-output relationship is called as "ProductionProduction FunctionFunction".

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Production function relates physical output of a production process to physical input or factors of production.

A production function is customarily assumed to specify the maximum output from a given set of inputs.

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The production function is central to the marginalist focus of neoclassical economics ,its definition of efficiency as allocative efficiency , its analysis of how market price can govern the achievement of allocative efficiency in a economy , and an analysis of the distribution of income , which attributes factor income to the marginal product of factor inputs.

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A production function can be expressed in a functional form as ,

Q = f (X 1 , X2 ,X3……Xn)

Where Q is quantity of output and X1 ,X2…..Xn are quantities of factor inputs.

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FACTORS OF PRODUCTION

Factors of production: the inputs used to produce goods and services.

Factors of production are

Land

Labour

Capital

Entrepreneur

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FACTORS OF PRODUCTION

All factors of production like Land, Labour, Capital, Entrepreneur are required altogether at a time to produce a COMMODITY.COMMODITY.

According to Prof. Benham, "Anything that contributes towards output is a factor of production."

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FOUR FACTORS OF PRODUCTION IN ECONOMICS

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FACTORS OF PRODUCTION- LANDLAND

Land is a Natural & Primary Factor of Production.

Land is not created by mankind but it is a gift of nature. So, it is called as natural factor of production. It is also called as original or primary factor of production. Normally, land means surface of earth.

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CHARACTERISTICS OF LAND 18

FACTORS OF PRODUCTION- LABORLABOR

Labour is an ability to work.

Labour is a broad concept because it includes both physical and mental labour (as per above picture). Labour is a primary or human factor of production. It indicates human resource.

Labourer is a person who owns labour. So labourer means worker. It is a person engaged in some work.

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CHARACTERISTICS OF LABOUR

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FACTORS OF PRODUCTION- CAPITALCAPITAL

Normally, capital means investment of money in business. But in economics money becomes capital only when it is used to purchase real capital goods like plant, machinery, etc. When money is used to purchase capital goods, it becomes Money Capital.

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CHARACTERISTICS OF CAPITAL

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FACTORS OF PRODUCTION- ENTREPREENUR

Factors of production viz. land, labour and capital are scattered at different places. All these factors have to be assembled together. This work is done by enterprise through entrepreneur. This is an 'Organization Function'. Organization function is the work of bringing the required factors together and making them work harmoniously.

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QUALITIES / SKILLS OF AN ENTREPREENUR

To be a successful and ideal entrepreneur, one should have certain qualities orskills as given below :-

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THANK YOU

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