basics of production

7/26/2019 basics of Production

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Production Division

1. What is production?

"Production is the process of transforming raw materials or purchased components into finishedproducts for sale."

Image Credits Moon Rodriguez.

Meaning of Production

Production is a process of transforming (converting) inputs (raw-materials) into outputs

(finished goods). So, production means the creation of goods and services. It is done to

satisfy human wants. Thus, production is a process of transformation.

The functions of the production department

The production department often works ver closel with the purchasing department. The

purchasing department is responsi!le for understanding what clients want and providing it to

them at a price that is comforta!le.

The purchasing department will tell the production department what needs to !e produced how

much it needs to cost to make it and will give an idea of how man pieces of products are

needed in order to satisf the demand of customers.

The production department uses la!or machiner and a variet of techni#ues to !e a!le to

produce what the customers need or want.The production department also relies on the purchasing department to get them the materials

and accessories that are necessar for the production of goods.

The production department is often responsi!le for the maintenance and proper care of the

machiner and e#uipment that it uses to produce the goods.


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Role of the production department

I. The first function is to esta!lish standards in regard to the #ualit and the #uantit of the

products !eing made. Tpicall these standards are placed throughout the process not

$ust at the !eginning or end.

II. The second function of the department is to work with the purchasing department to

ensure enough materials are on the production line and to ensure replacement of an

!roken e#uipment. The purchasing department works with other departments to make

sure purchased e#uipment and materials are all stocked and availa!le.

III. The ne%t function is to work with the design and technical department to ensure the

product is !uilt to the correct specifications and to place an new designs or changes to

the product onto the line.

I&. 'inall the production department colla!orates with the works department to ensure there

is a proper workforce availa!le to check the #ualit of the product and make an

necessar repairs to an e#uipment that !reaks.

&. The production department does not work directl with the marketing department

(owever it remains in contact with marketing to ensure the products are attractive and

desired ! customers.


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2. Factors of production.

There are ) factors of production which when com!ined contri!ute to the production of goods

and services.

The are

*. +and

,. +a!our

-. Capital

). nterprise/ entrepreneurship

+and +a!our Capital ntrepreneur

0ll natural

resources

%1 soil

water tim!er

uranium etc

The pament

for land is

called rent.

Consists of all

human la!our

emploed to

carr out thework of an

organization.

+a!our

involves allthe efforts put

! theemploees toproduce goods

and services.

The pament

for la!our is

called wages

or salaries.

0ll man made

or artificial

resources.

%1 mone

machines!uildings etc

The pament

for capital iscalled interest.

0n

entrepreneur

comes up with

an idea andmakes plans

and decisions

to carr out a!usiness

venture. (e

takes all therisks

concerning his

!usiness

venture.

0n

entrepreneur

manages all

the otherfactors of

production to

make a!usiness

successful.

The pament

for

entrepreneursh

ip is

profit/loss.


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3. Types of Production Methods

There are two main tpes of production used to produce goods2

*. +a!our intensive method

,. Capital intensive method

Many usiness organi!ations in developed countrieshave opened manufacturing plants in the developing countries and employ more human

laour in production.

a!our intensive method2 this is where more human la!our is used in production than

technolog.

This method was used during the period of the industrial revolution when factories were first

developed in the 3.4. (owever over the ear5s modern technolog has developed introducing

full automated factories where minimum human involvement is re#uired in the process ofproduction.

"n early automoile factory

#apital intensive method2 this is where more modern technolog and machines are used in

production than human la!our. 6ith the development of technolog modern machiner and

full automated factories allow goods to !e to made #uickl.


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In capital intensive production the process of converting raw material into finished

product ta"es place smoothly in a flow using high tech machinery.

The method used $ill depend on a fe$ factors%

*. The tpe of product made

,. The availa!ilit of technolog / skill and knowledge of workers and finances

-. the region where production is taking place

In the developed regions of the world the capital intensive method is mostl used. This is

!ecause of the availa!ilit of finances which can !e invested on new technolog. 7n the other

hand the la!our intensive method is used in developing countries where there is a large

population and therefore a high rate of unemploment. 'urther these countries do not have the

finances to o!tain the latest technolog.

0ctivit1 identif the different countries where each of these methods are used.

a!our intensive #apital intensive

1.

2.

3.

&.

"dvanta'es and disadvanta'es of the t$o methods of production

a!our intensive #apital intensive

"dvanta'es "dvanta'es

*. 8olves the unemploment pro!lem in

poorer developing regions.

*.9uick and efficient production and higher

output.

,. 3plifts the standard of living. ,.(igh #ualit production1consistent

#ualit


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-. Is !est suited for certain tpes of

products. %1 handicrafts watches$ewelr certain items of clothing etc.

where skill and finesse are re#uired.

-. Can keep up with the latest trends

in products/ designs

). Reduces environment pollution. ). Can produce #uickl to meet the needs and

match the changes in the world market.

:. Is !est suited for countries which do not

have the finances to invest in newtechnolog and also do not have the

technical knowhow.

:.6ork can !e carried out ,) hours a da ;

das a week all ear long

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