INTRODUCTION TO

PRODUCTION
MANAGEMENT

Prepared by:
MBA Ist year Sec – ‘A’
Roll No. – 1 to 12 (Group A)
 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 in a controlled manner as per the policies of the
organization.

 The set of interrelated management activities, which are involved in

manufacturing certain products, is called as production management.

 The performance of the management activities with regards to selecting,

designing, operating, controlling and updating production system.

 Production management is a function of Management, related

to planning, coordinating and controlling the resources
required for production to produce specified product by
specified methods, by optimal utilization of resources.

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 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.

 ‘a process by which goods and services are created’ by Edwood Buffa

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 Some examples of production

 manufacturing custom-made products like, boilers

with a specific capacity, constructing flats.

 some structural fabrication works for selected

customers,

 manufacturing standardized products like, car, bus,

motor cycle, radio, television, etc

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 PRODUCTION SYSTEM

The production system of an organization is that part, which

produces products of an 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.

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Schematic production system

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 Characteristics of the production system
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.

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Classification of Production

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 1. 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.

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 Characteristics
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a
challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements
of each product.

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 Advantages

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.

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 Limitations

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.

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 2. BATCH PRODUCTION
 It is defined 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.”
-APICS
(American Production and Inventory Control Society)
 It is characterised by the manufacture of
limited number of products produced at
regular intervals and stocked awaiting sales.

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 Characteristics

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.

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 Advantages
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.

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 Limitations
1. Material handling is complex because of
irregular and longer flows.
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.

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 3. 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 standardisation exists and
all outputs follow the same path.

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 Characteristics
1. Standardisation 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.
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 Advantages
1. Higher rate of production with reduced cycle
time.
2. Higher capacity utilisation due to line
balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.

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 Limitations
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.

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 4. 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.

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 Characteristics
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final
product.
5. Planning and scheduling is a routine action.

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 Advantages

1. Standardization of product and process sequence.

2. Higher rate of production with reduced cycle time.
3. Higher capacity utilisation 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.

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 Limitations
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.

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 PRODUCTION MANAGEMENT
 Production management is a process of planning,
organizing, directing and controlling the activities of the
production function.

 It combines and transforms various resources used in the

production subsystem of the organization into value
added product in a controlled manner as per the policies
of the organization.

 “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.” - E.S. Buffa
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 Objectives of Production Management
To produce goods services of right quality and quantity at the right
time and right manufacturing cost.

RIGHT QUALITY:
The quality of product is established based upon the customers
needs. The right quality is not necessarily best quality. It is
determined by the cost of the product and the technical
characteristics as suited to the specific requirements.

RIGHT QUANTITY:
The manufacturing organization should produce the products in
right number. If they are producing excess of demand the capital
will block up in the form of inventory and if the quantity is
produced in short of demand, leads to shortage of products.
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 RIGHT TIME:

 Timeliness of delivery is one of the important parameter to

judge the effectiveness of production department. So, the
production department has to make the optimal utilization
of input resources to achieve its objective.

RIGHT MANUFACTURING COST:

 Manufacturing costs are established before the product is
actually manufactured. Hence, all attempts should be
made to produce the products at pre-established cost, so as
to reduce the variation between actual and the standard
(pre-established) cost.

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 SCOPE OF PRODUCTION MANAGEMENT:
 The scope of the production management
includes

a) Activities relating to analysing and controlling of product

system.

b) Activities relating to analysing and controlling of

production operations after the production system has
been activated.

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 Activities relating to production system
designing

 Concerns with the production of tools, the design,

development and installation of equipment and the
selection and optimization of the size of the firm.

 The selection of the plant location, plant layout,

material handling system are the functions of
production engineering.

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 Activities relating to analysing and control of production
 Production planning:
It includes preparation of short term production schedules, a plan for
manufacturing the finished and semi finished stock, specifying how the
production resources of the concern are to be employed over some
future time in response to the predicted demand for products and
services.
 Production control:
The production manager has to look after the control activities at 3 levels:
1. Control of static inventory (as raw materials, purchased parts, finished goods)
2. Control of flow of materials into the plant through the well - judged
purchasing.
3. Control of work in progress through production control.

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 FUNCTIONS OF PRODUCTION MANAGEMENT DEPARTMENT
 The selection of Materials for the product.
 Finding the best method for the process.
 Selection of suitable machinery for the process desired,
designing
the maintenance policy and design of layout of machines.
 To fix up the Production targets and delivery dates and to keep
the production costs at minimum.
 The time scheduling specifying when to start and when to
finish the process required.
 fixing the flow lines or Routes for various raw materials,
components etc., from the stores to the packing of finished
product.

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Contd.
 Despatching: The Production Management department has to prepare
various documents such as Job Cards, Route sheets, Move Cards,
Inspection Cards for each and every component of the product. These are
prepared in a set of five copies.

 Expediting or Follow up: Once the documents are dispatched, the

management wants to know whether the activities are being carried out as
per the plans or not. Expediting engineers go round the production floor
along with the plans, compare the actual with the plan and feed back the
progress of the work to the management. This will help the management to
evaluate the plans.

 Inspection: Here inspection is generally concerned with the inspection

activities during production, but a separate quality control department does
the quality inspection, which is not under the control of Production
Management.

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contd
 Evaluation: The Production department must evaluate itself and
its contribution in fulfilling the corporate objectives and the
departmental objectives. This is necessary for setting up the
standards for future. What ever may be the size of the firm;
Production management department alone must do Routing,
Scheduling, Loading, Dispatching and expediting.

This is because this department knows very well regarding materials,

Methods, and available resources etc.

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Production Function

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 BENEFITS DERIVED FROM EFFICIENT PRODUCTION
MANAGEMENT

 Consumer benefits from improved industrial Productivity,

increased use value in the product. Products are available to
him at right place, at right price, at right time, in desired
quantity and of desired quality.
 Investors: They get ncreased security for their investments,
adequate market returns, and creditability and good image in
the society.
 Employee gets adequate Wages, Job security, improved
working conditions and increased Personal and Job
satisfaction.

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 Suppliers: Will get confidence in management and their bills
can be realized with out any delay.

 Community: community enjoys Benefits from economic and

social stability.

 The Nation will achieve prospects and security because of

increased Productivity and healthy industrial atmosphere.

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