3. THE STRATEGIC IMPORTANCE OF
PRODUCTION
 Along with marketing and finance, production is a vital to business. Without
it, a company cannot able to pay their employees, lenders and stockholders.
 Without production, it cannot able to generate profits and ultimately fails.
1) MASS PRODUCTION
 It refers to the process of creating large numbers of similar products
efficiently.
 This can be done through specialized skills, mechanization and
standardization.
 Specialization means dividing tasks among workers to increase the
productivity.
 In mechanization, much of the work is performed by machines.
 Standardization involves producing uniform, interchangeable goods and
parts.

4. 2) FLEXIBLE PRODUCTION
 It involves using information technology to share the details of customer
orders, programmable equipment to fulfill the orders and skilled people
to carry out whatever tasks are needed to fill a particular order.
 It is cost-effective in small scale production.
• Flexible Production is now adopted by many auto industries
including TOYOTA and HONDA which enables them to produce
different kinds of cars at same plant.
3) CUSTOMER-DRIVEN PRODUCTION
 This system evaluates customer demands in order to make the
connection between products manufactured and products bought.
 An approach to customer-driven production is to make the product when
an order is placed by the customer.
 Another approach to this is to establish links between factories and
retailers’ scanners to monitor the sales and to take the feedback from
retailer about the preferences of customers and design the product.
• Examples include Del, HP.

5. PRODUCTION PROCESSES
There are four production processes:
1) Analytic Production Process
2) Synthetic Production Process
3) Continuous Production Process
4) Intermittent Production Process
1) ANALYTIC PRODUCTION PROCESS
 It reduces a raw material to its component parts in order to extract one or
more marketable products.
 EXAMPLES
• Break down of crude oil into several products including
gasoline, heating oil and aviation fuel.
• Corn processing results in food products including animal feed
and corn sweetener.

6. 2) SYNTHETIC PRODUCTION PROCESS
 It combines number of raw materials or transforms different parts to produce
finished products.
 EXAMPLE
• Camera production by combining various parts such as shutter,
LCD screen or a lens cap.
3) CONTINUOUS PRODUCTION PROCESS
 It generates finished products over a lengthy period of time.
 EXAMPLE
• Steel Industry
4) INTERMITTENT PRODUCTION PROCESS
 It generates products in short production runs by shutting down and
changing configurations of machines to produce different products.
 EXAMPLE
• Tailor stitch clothes on the basis of type of demand rather on
continuous basis.

7. TECHNOLOGY AND PRODUCTION
PROCESS
1) GREEN MANUFACTURING PROCESSES
 Manufacturing process focus on such processes that result in a
reduction of waste, energy use and pollution.
 LEED(Leadership in Energy and Environmental Design) is a program
administered by U.S. Green Building Council that aims to help building
owners and operators be environmentally responsible and use
resources efficiently.
2) ROBOTS
 A reprogrammable machine capable of performing a variety of tasks that
require repeated manipulation of materials and tools.
 Robots were seen in auto and electronics manufacturing.
 The simplest kind of robot used by firms is pick-and-place-robot that
moves only in two or three directions and picks something from one
place and move it to other place.

8. 3) COMPUTER-AIDED DESIGN(CAD)
 It allows engineers to design components or entire
products on computer screens faster and with fewer
mistakes.
 Engineers can use light pen to sketch drawings on
screen.
 It is used to create 2-D drawings or 3-D models.
 This technique is used by auto industries to create
shapes of cars and bikes using computer screens.
They can adjust length, weight, height of the car
using this techniques.
4) COMPUTER-AIDED
MANUFACTURING(CAM)
 It involves the use of computer software to control
machine tools and related machinery in the
manufacturing of work pieces.
 They save both time and effort and also allows
more precise manufacturing of parts.

9. 5) FLEXIBLE MANUFACTURING SYSTEMS
 It is a production facility that workers can quickly modify to manufacture
different products.
 FMS consists of:
• Computer-controlled machines
• Robots
• Remote-controlled carts to deliver materials.
6) COMPUTER-INTEGRATED MANUFACTURING
 It is a production system in which computers help workers design
products, control machines, handle materials and control the production
function in an integrated fashion.
 It consists of centralized computer system that runs and controls specific
processes and functions.
 The advantages of (CIM) includes increased productivity and improved
quality.

10. THE LOCATION DECISION
 The decision to locate production facility depends upon transportation, human
and physical factors.
 Transportation factors include proximity to markets and raw materials,
availability of alternative modes for transporting both inputs and outputs.
 Physical factors include weather, water supplies, available energy and options
for disposing of hazardous waste.
 Human factors include an area’s labor supply, local regulations, taxes and
living conditions.
THE JOB OF PRODUCTION
MANAGERS
A production manager performs four tasks:
1. Planning of production process
2. Determine the best layout for firm’s facilities
3. Implement the production plan
4. Control the manufacturing process

11. 1. PLANNING THE PRODUCTION PROCESS
 The first task that a production manager can perform is to plan the
production process.
 This planning begins by choosing which good or service to offer to
customers and this is the basic reason of operating for a company.
 The product must satisfy needs and wants of customers and must be
produced efficiently.
 Other decisions regarding product’s pricing, machinery purchasing and
selection of retail outlets depends on product planning.
2) DETERMINING THE FACILITY LAYOUT
 The managers then selects the best layout for the facility(the space
in which a business's activities take place).
 Four common layouts are chosen by production managers.
1) Process Layout
2) Product Layout
3) Fixed-Position Layout
4) Customer-Oriented Layout

12. a) PROCESS LAYOUT
 It groups machinery and equipment according to
their functions.
 It facilitates the production of nonstandard items in
small batches.
 Its purpose is to process goods that have a variety
of functions.
 Example include a typical machine shop which
have separate departments where machines are
grouped by functions such as grinding, drilling,
pressing and lathing.
b) PRODUCT LAYOUT
 It sets up production equipment along a product-
flow line and the work in process moves along this
line past workstations.
 This layout produces large number of similar items.
 This layout is now used by many auto
manufacturers where humans along with robots
can perform activities.

13. c) FIXED-POSITION LAYOUT
 It places the product in one spot and
workers, materials and equipment
come to it.
 This approach suits production of very
large, bulky, heavy or fragile products.
 For example, a bridge can be built on
this layout.
d) CUSTOMER-ORIENTED
LAYOUT
 In customer-oriented layout, a firm
should arrange its facilities to enhance
interactions between customers and
its services.
 Example include hospital.

14. 3)IMPLEMENTING THE PRODUCTION PLAN
 After planning and layout next step is to implement the production plan.
 This activity involves:
a) Make, Buy or Lease Decision
b) Selection of Suppliers
c) Inventory Control
a) MAKE, BUY OR LEASE DECISION
 Choosing whether to manufacture a product or component in house,
purchase it from outside supplier or lease it.
 Factors affecting this decision includes cost of leasing or purchasing parts
from vendors compared with the cost of producing them in house.
b) SELECTION OF SUPPLIERS
 For the selection of suppliers, production managers compare the quality,
prices and services offered by competing companies.
 Other factors in the selection of suppliers might include firm’s experience
with each supplier, speed of delivery or other services.

15. c)INVENTORY CONTROL
 Inventory control is a scientific system which indicates as to what to order,
when to order, how much to order and how much to stock so that
purchasing costs and storing costs are kept as low as possible.
 Expenses involved in storing inventory are warehousing costs, taxes,
insurance and maintenance.
 Firms waste money if they store more inventory.
 Having too little inventory results in shortage of goods for sale that could
lead to delays and unhappy customers.
• JUST-IN-TIME INVENTORY SYSTEMS(JIT)
 It is an inventory strategy companies employ to increase efficiency
and decrease waste by receiving goods only as they are needed in
the production process, thereby reducing inventory costs.
 JIT systems are used in wide range of industries including medical
supplies.
 At Toyota the raw materials are not brought to the production floor until
the order is received from the client and the product is ready to be
built.

16. • MATERIALS REQUIREMENT PLANNING
 It is a computer-based production planning system that lets a firm ensure
that it has all the parts and materials it needs to produce its output at the
right time and place and in the right amounts.
3) CONTROLLING THE PRODUCTION PROCESS
• PRODUCTION CONTROL
 It creates a well-defined set of procedures for coordinating people,
materials and machinery to provide maximum production efficiency.
• For example, suppose a factory produce 80000 watches in one month.
Production manager divides this task to 4000 watches daily. To
achieve this, he determine the number of workers, raw materials and
machines.
 Production Control is a five step process composed of:
1. Planning
2. Routing
3. Scheduling
4. Dispatching
5. Follow-up

17. 1. PRODUCTION PLANNING
 It determines the amount of resources(raw materials and other components)
an organization needs to produce a certain output.
 The production planning process develops a bill of materials that lists all
needed parts and materials.
 Production planning also ensures the availability of needed machines.
2) ROUTING
 It determines the sequence of work throughout the facility and specifies who
will perform each aspect of the work at what location.
 Routing choices depends on:
• Nature of good or service
• Facility Layout
3) SCHEDULING
 In this stage, managers develop timetables that specify how long each
operation in the production process takes and when workers should perform
it.
 Efficient scheduling results in efficient use of resources.

18. 4) DISPATCHING
 In this stage, management instructs each department on what work to do
and the time allowed for its completion.
 The dispatcher authorizes performance, provides instructions and list job
priorities.
5) FOLLOW-UP
 In this stage, managers spot problems in the production process and
come up with solutions.
 Problems may include machinery malfunctions, delayed shipments and
employee absenteeism can all affect production.
IMPORTANCE OF QUALITY
 QUALITY
 It is defined as a good or service free of deficiencies.
 Quality is very important to a firm as poor quality can result in lost sales
and a bad reputation of organization in society.
 Some costs of poor quality includes repair costs, rework and employee
turnover.

19.  One process through which companies can improve their quality is
benchmarking.
 BENCHMARKING
 It is the process of analyzing how other organizations achieve their high
performance levels, and to use this information to improve performance.
 A firm may choose a direct competitor or choose a firm from different
industry for benchmarking.
 For example, a shoe retailer compares their sales per square foot with
industry peers.
 QUALITY CONTROL
 It involves measuring output against established quality standards.
 Standards should be set high enough to meet customer expectations.
 Manufacturing firms can monitor quality levels through visual inspection,
electronic sensors, robots and X-rays.
ISO STANDARDS
 IT is the organization whose mission is to develop and promote international
standards for Business, Government and Society to facilitate global trade
and cooperation.
 ISO is a network of 163 countries ant it was operating since 1947.