2.production

PowerPoint PresentationProduction
Definition of production
Production takes place when resources such as raw materials or components, are changed into ‘products’.
It refers to those activities that bring a product into being.
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Production Function
States the relationship between inputs and outputs
Inputs – the factors of production classified as:
Land – all natural resources of the earth – not just ‘solid earth’!
Price paid to acquire land = Rent
Labour – all physical and mental human effort involved in production
Price paid to labour = Wages
Capital – buildings, machinery and equipment
not used for its own sake but for the contributioit makes to production
Price paid for capital = Interest
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Production Function
Production Function
There is a production function for every good that shows the maximum output you can get from any quantities of inputs. The production function is the description of the current best technology for making a good.
Production functions apply to firms.
E.g., Maruti Suzuki has a production function for producing Swift. GM has a production function for producing Chevrolet’s.
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Production Function
Mathematical representation
Q = f (K, L, La)
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Analysis of Production Function:
Short Run
In the short run at least one factor fixed in supply but all other factors capable of being changed
Reflects ways in which firms respond to changes
in output (demand)
Can increase or decrease output using more or less of some factors but some likely to be easier
to change than others
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Short Run
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Short Run
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Short Run
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Analysing the Production Function: Long Run
The long run is defined as the period of time taken to vary all factors of production
By doing this, the firm is able to increase its total capacity – not just short term capacity
Associated with a change in the scale of production
The period of time varies according to the firm
and the industry
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Long Run
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Scales of production
Batch
Mass (continuous flow)
Characteristics of the different scales of production
High
Low
General
High
Low
High
Medium
Medium/High
Specialised
Medium
Medium/High
Medium
Low
High
Specialised
Low
High
Low
One-off/Job
Batch
Three methods of production
It involves the production of a single product at a time.
Job production
Job production
Able to produce unique orders to meet customers’ individual needs.
More likely to motivate workers (see end results)
Fairly simple way of production(one a time)
Disadvantages:
High selling costs
This involves dividing the work into a number of different operations, or a method that involves completing one operation at a time on all units before performing the next.
Job production
Batch production
Batch production
Reducing the need for skilled workers
More standardized products and less machinery needed
Disadvantages:
Less motivated workers for repetitive one operation
Careful planning needed to reduce idle machines or worker waiting
It is a method of large-scale production of standardized products, where each operation on a unit is performed continuously one after another, usually on a production assemble line
It often includes mass, repetitive and process production.
Job production
Batch production
Flow production
Flow production
Highly automated and high efficiency
Able to produce large quantity of products
Disadvantages:
Limited ability to meet unique customer needs
Repetitive operation and less motivation
High costs with the breakdown of machines
Factors affecting the choice of proper production methods
The nature of the product
Different products may require a specific production method.
The size of market
A big or small market may require a different production method.
The stage of business’ development
A start-up firm or large established firm will use different production methods.
The current state of technology
Changes in technology result in firms using new mass production methods.
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Strategic Importance of the
Mass Production—system for manufacturing products in large amounts through effective combinations of employees with specialized skills, mechanization, and standardization
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1. A system for manufacturing products in large amounts through effective combinations of employees with specialized skills, mechanization, and standardization
2. Makes outputs available in large quantities at lower prices than individually crafted items would cost, and begins with the specialization of labor, dividing work into its simplest components
3. The assembly line is a manufacturing technique that moves the product along a conveyor belt past a number of workstations, where production workers perform specialized tasks such as welding, painting, installing individual parts, and tightening bolts.
The Job of Production Managers
Inventory Control
Requires balancing the need to keep stocks on hand to meet demand against the expenses of carrying the inventory
Perpetual inventory: system that continuously monitors the amounts and location of inventory
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1. production managers must balance the need to keep stocks on hand to meet demand against the costs of carrying the inventory.
2. among the expenses involved in storing inventory are:
warehousing costs, taxes, insurance, maintenance.
3. Many firms maintain perpetual inventory systems to monitor the amounts and locations of their stocks continuously.
4. Some companies go further and hand over their inventory control functions to suppliers, which is called vendor-managed inventory.
5. Some firms have modified vendor-managed inventory approaches called CPFAR - a planning and forecasting technique involving collaborative efforts by both purchasers and vendors.
Implementing the Production Plan
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a. implements a broad management philosophy that reaches beyond the narrow activity of inventory control to influence the entire system of production and operations management
b. seeks to eliminate all sources of waste - anything that does not add value - by providing the right part at the right place at the right time
c. the inventory control function supplies parts to a production line or an entire company, as they are needed
d. production using JIT shifts much of the responsibility for carrying inventory to vendors, which operate on forecasts and keep stocks on hand to respond to manufacturers’ needs
e. producers address the risks of JIT by building long-term relationships with suppliers who demonstrate their ability to meet high standards
Implementing the Production Plan
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a. a computer-based production planning system
b. lets a firm ensure that it has all the parts and materials it needs to produce its goods and services at the right time and place and in the right amounts
c. production managers use MRP programs to create schedules that identify the specific parts and materials required to produce an item.
Controlling the Production Process
Production planning—determines the amount of resources (including raw materials and other components) a firm needs to produce a certain output
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Production Planning
a. determines the amount of resources - including raw materials and other components - a firm needs to produce a certain output
b. develops a bill of materials that lists all needed parts and materials
c. ensures the availability of needed machines and workers.
Routing
a. determines the sequence of work throughout the facility
b. specifies who will perform each aspect of production at what location
c. depend on two factors:
•the nature of the good or service
•the facility layouts - product, process, fixed-position, or customer-oriented.
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a. the production managers develop timetables that specify how long each operation in the production process takes and when workers should perform it
b. efficient scheduling ensures that production will meet delivery schedules and make efficient use of resources
c. use a number of analytical methods for scheduling including the Gantt chart, which tracks projected and actual work progress over time
d. complex project might require a PERT (Program Evaluation and Review Technique) chart, which seeks to minimize delays by coordinating all aspects of the production process.
Gantt chart—tracks projected and actual work progress over time
PERT (Program Evaluation and Review Technique)—chart which seeks to minimize delays by coordinating all aspects of the production process
Critical Path—sequence of operations that requires the longest time for completion
Sample Gantt Chart
PERT Diagram for Building a Home

2.production

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