Concept of production

Production, Productivity and production systems for Industrial Management in Btech for 6th Semester

1. CONCEPT OF PRODUCTION
Production function is that part of an organization, which is concerned with the transformation of
a range of inputs into the required outputs (products) having the requisite quality level.
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’. 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.
Fig. Schematic production
system PRODUCTION SYSTEM

2. The production system of an organization is that part, which produces products of an 19
organization. It is that activity whereby resources, flowing within a defined system, are combined and
transformed in a controlled manner to add value in accordance with the policies communicated by
management. A simplified production system is shown above.
The production system has the following characteristics:
1.Production is an organized activity, so every production system has an objective.
2.The system transforms the various inputs to useful outputs.
3.It does not operate in isolation from the other organization system.
4.There exists a feedback about the activities, which is essential to control and improve
system performance.
Classification of Production System
Production systems can be classified as Job Shop, Batch, Mass and Continuous Production
systems.

3. INTERMITTENT
SYSTEM
JOB SHOP PRODUCTION
Job shop production are characterised by manufacturing of one or few quantity of products
designed and produced as per the specification of customers within prefixed time and cost. The
distinguishing feature of this is low volume and high variety of products.
A job shop comprises of general purpose machines arranged into different departments.
Each job demands unique technological requirements, demands processing on machines in a
certain sequence.
Characteristics
The Job-shop production system is followed when there is:
1.High variety of products and low volume.
2.Use of general purpose machines and facilities.

4. 3.Highly skilled operators who can take up each job as a challenge because of uniqueness.
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4.Large inventory of materials, tools, parts.
5.Detailed planning is essential for sequencing the requirements of each product, capacities
for each work centre and order priorities.
Advantages
Following are the advantages of job shop production:
1.Because of general purpose machines and facilities variety of products can be produced.
2.Operators will become more skilled and competent, as each job gives them learning
opportunities.
3.Full potential of operators can be utilised.
4.Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
1.Higher cost due to frequent set up changes.
2.Higher level of inventory at all levels and hence higher inventory cost.
3.Production planning is complicated.
4.Larger space requirements.
BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society (APICS)
“as a form of manufacturing in which the job passes through the functional departments in
lots or batches and each lot may have a different routing.” It is characterised by the
manufacture of limited number of products produced at regular intervals and stocked awaiting
sales.
Characteristics
Batch production system is used under the following circumstances:
1.When there is shorter production runs.
2.When plant and machinery are flexible.
3.When plant and machinery set up is used for the production of item in a batch and change
of set up is required for processing the next batch.
4.When manufacturing lead time and cost are lower as compared to job order production.
Advantages
Following are the advantages of batch production:
1.Better utilisation of plant and machinery.
2.Promotes functional specialisation.
3.Cost per unit is lower as compared to job order production.
4.Lower investment in plant and machinery.
5.Flexibility to accommodate and process number of products.
6.Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:

5. 1.Material handling is complex because of irregular and longer flows.
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2.Production planning and control is complex.
3.Work in process inventory is higher compared to continuous production.
4.Higher set up costs due to frequent changes in set up.
MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous process are called mass
production. This production system is justified by very large volume of production. The
machines are arranged in a line or product layout. Product and process standardization exists and
all outputs follow the same path.
Characteristics
Mass production is used under the following circumstances:
1.Standardization of product and process sequence.
2.Dedicated special purpose machines having higher production capacities and output rates.
3.Large volume of products.
4.Shorter cycle time of production.
5.Lower in process inventory.
6.Perfectly balanced production lines.
7.Flow of materials, components and parts is continuous and without any back tracking.
8.Production planning and control is easy.
9.Material handling can be completely automatic.
Advantages
Following are the advantages of mass production:
1.Higher rate of production with reduced cycle time.
2.Higher capacity utilization due to line balancing.
3.Less skilled operators are required.
4.Low process inventory.
5.Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
1.Breakdown of one machine will stop an entire production line.
2.Line layout needs major change with the changes in the product design.
3.High investment in production facilities.
4.The cycle time is determined by the slowest operation.
CONTINUOUS PRODUCTION
Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product. The items are made to flow through the sequence of
operations through material handling devices such as conveyors, transfer devices, etc.
Characteristics

6. Continuous production is used under the following circumstances:
1.Dedicated plant and equipment with zero flexibility.
2.Material handling is fully automated.

7. 3.Process follows a predetermined sequence of operations.
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4.Component materials cannot be readily identified with final product.
5.Planning and scheduling is a routine action.
Advantages
Following are the advantages of continuous production:
1.Standardization of product and process sequence.
2.Higher rate of production with reduced cycle time.
3.Higher capacity utilization due to line balancing.
4.Manpower is not required for material handling as it is completely automatic.
5.Person with limited skills can be used on the production line.
6.Unit cost is lower due to high volume of production.
Limitations
Following are the limitations of continuous production:
1.Flexibility to accommodate and process number of products does not exist.
2.Very high investment for setting flow lines.
3.Product differentiation is limited.
https://www.slideshare.net/posku/introduction-to-production-systems
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8. PRODUCTION
Production is a process of creating or enhancing utility by transforming set of inputs
such as labor, materials, capital, information, knowledge & energy into a set of
output such as finished goods or services.

9. Productivity
DEFINITION of 'Productivity'
Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it
measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a
given level of output.
Productivity = Output/Input
Meaning
Productivity is a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful
outputs. Productivity is computed by dividing average output per period by the total costs incurred or resources (capital,
energy, material, personnel) consumed in that period. Productivity is a critical determinant of cost efficiency.
This can be achieved by
(i)Either producing more output with the same inputs
(ii)Or using fewer inputs for the same outputs
Productivity is a common measure of how well a country, industry or business unit is doing using its resources or
factors of production.
It can be expressed as the ratio of output to inputs used in the production process, i.e.
output per unit of input. When all outputs and inputs are included in the
productivitymeasure it is called total productivity. Outputs and inputs are defined in the
totalproductivity measure as their economic values.
Productivity can be improved by:

10. ·Raising the skill level of the workers through training
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·Using more technologically advanced equipment in the production process.
·Improving the motivation level of the employees
·By managing the available resource in a more efficient way.
Features of Productivity Measurement system
Total Productivity of an enterprise is the sum of productivities of its component parts.
2. The procedure of calculation should be simple, easy & comparable with the accounting system
of an organisation.
3. The measurement should be realistic , accurate, cost effective & consistent with time.
4.The measurement should be independent of external changes , not within the control of the
firm.
5.Measurement should be associated with achievable objectives, should be practical & data
collection should be easy & understandable.
Productivity Index: it is used to compare the productivity during the current year with the
productivity during the base year. ( Base year is any year which the company uses for
comparative study)
Productivity Index= productivity during the current year
productivity during the base year

11. Factors affecting Productivity
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Factors affecting national productivity
1.Human resources
2.Technology and Capital Investment
3.Government Regulation
Factors Affecting Productivity in organization:-
1.Product( or system ) design
2.Machinery and Equipment
3.Skill and Effectiveness of the worker
4.Production Volume
Production and Productivity
DIFFERENCE BETWEEN PRODUCTIVITY AND PRODUCTION
Source: https://www.transtutors.com/homework-help/industrial-management/productivity/difference-between-production-
and-productivity.aspx

Production and productivity are different terms and carry different meaning. It is wrong to assume that
higher production will always lead to higher productivity or vice-versa.

Production is related to the activity of producing goods or services. It is a process (or system) of
converting input into some useful, value-added output.

Productivity is related to the efficient utilization of input resource into produced in the form of value added
goods or services.

Production is a measure of output produced. The emphasis is Not on how well the input-resources are
utilized. Productivity, on the other hand, puts emphasis on the ratio of output produced to the input used.
Its focus is on how well the input resource is used for conversion into output.

Example
A company is manufacturing 24,000 components per month by employing 100 workers in 8 hour shift.
The company gets additional order from government to supply additional 6000 components. The manage-
ment decides to employ additional workers. What will be production and productivity level when the
number of a additional workers employed are: (i) 30 (ii) 25 (iii) 20.

Solution
Present production = 24,000 Components
Present productivity (of Labor)
= Present Production (i.e., output)/Total man-hours (i.e., output)

12. = 24,000 components/(100 workers) (8hour) (30 days of the month)
= 24,000 / 24,000 = 1 Component/man-hour

With increased order
(i) When additional 30 workers are hired
Production = 24,000 + 6000 = 30,000 components
Productivity (of labor) = Increased total production/ Total man-hour
= 30,000 / (100 + 30) (8) (30) = 0.96 Component/man-hour
(ii) When additional 25 workers are hired
Production = 24,000 + 6000 = 30,000 components
Productivity (of labor) = 30,000/ (100 +25) (8) (30)
= 1 Component/ man-hour
(iii) When additional 20 workers are hired
Production = 24,000 + 6000 = 30,000 components
Productivity (of labor) = 30,000/ (100 +25) (8) (30)
= 1.04 Component/ man-hour
In this example, it is clear that production has increased by 6000 units. Therefore,

Increase in Production = 30,000 – 24,000/24,000 * 100 = 25%

In case of productivity, the labor productivity falls below the initial level of 1 component per man-hour if
more than 25 workers are hired. This level of additional man-power may be termed as break-even level
from the labor productivity point of view. Therefore other things remaining constant, no more than 26
workers should be hired for this increased production.

We have understood three things from the above example:
1. Production and productivity are two different things.
2. Increase in production does not necessarily mean increase in productivity.
3. Productivity is always associated with the context in which it is calculated. For example, in the above
case, we have calculated and interpreted labor productivity. In another case, someone may like to know
about material productivity or energy productivity. If labor productivity has decreased due to some reason,
it may not always mean that other forms of productivity, say material productivity, will also fall. Various
forms of productivity will be explained in sections to follow.
Productivity and Efficiency
Productivity is often confused with efficiency. Efficiency is generally seen as the ratio of the time needed to
perform a task to some predetermined standard time. However, doing unnecessary work efficiently is not
exactly being productive. It would be more correct to interpret productivity as a measure of effectiveness
(doing the right thing efficiently), which is outcome-oriented rather than output-oriented.

13. Synopsis:
The meaning, definition and other basic points covered in this article on a production system are listed as follows:
1. Meaning of production.
2. Meaning of system.
3. Definition of production system.
4. Meaning of production system.
5. Components.
6. Examples.
7. Conclusion.
Now let's read each point to understand the basics of a production system.
1. Meaning of 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. 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.
2. Meaning of system
System is an arrangement or assembly of inter-dependent processes (activities) that are based on some logic and function. It operates as a whole
and is designed (build) with an intension to achieve (fulfill) some objective or do some work. Huge systems are often a collection (assembly) of
smaller sub-systems.
3. Definition of 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)."
Production system utilizes materials, funds, infrastructure, and labour to produce the required output in form of goods.
4. Meaning of production system
Production system consists of three main components viz., Inputs, Conversion Process and Output.
1. Inputs include raw-materials, machines, man-hours, components or parts, drawing, instructions and other paper works.
2. Conversion process includes operations (actual production process). Operations may be either manual or mechanical or chemical.
Operations convert inputs into output. Conversion process also includes supporting activities, which help the process of conversion. 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.
3. Output includes finished products, finished goods (parts), and services.
The three components of a production system are depicted in this diagram.

14. Image credits © Moon Rodriguez.
Hence, we can say that, production system is a union or combination of its three main components viz., Inputs, Conversion Process, and Output.
In short, everything which is done to produce goods and services or to achieve the production objective is called production system.
5. Examples
The examples of a production system are as follows:
1. 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).
2. 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 program.
6. Conclusion
Production system is a result of arranging inputs, their conversion process and output based on some logic and functions. Production system fails
if any such arrangement made don't give a desired level of outcome.