UNIT - I INTRODUCTION Firms will continue to do business as long as they meet consumer demands.

By producing and selling goods and services that satisfy consumer needs businesses will compete in the marketplace. What firms create for the marketplace, economists call utilitythe want-satisfying power of a good or service. Economists have defined four types of utility: time, place, ownership, and form. Time, place, and ownership utility exist through marketing and distribution having goods and services available for consumers at locations convenient for them and that facilitate title transfer at the time of purchase. Form utility is created when raw materials are converted into finished goods or services. A chair is the sum of wood, design, manufacture and assembly. Cotton is harvested from fields, processed into thread, woven into fabric, and then by cutting, shaping, sewing, adding zippers and belt loops are made into Wrangler jeans. A firms production function is responsible for the creation of form utility. PRODUCT Though many authors define the product with Consumer orientation, it is better for us to deal with different angles, because it will be helpful for us to understand the subject of production and Operation Management. (i) For a Consumer: The product is a combination of or optimal mix of potential utilities. This is because every consumer expects some use or uses from the product. Hence he/she always identifies the product in terms of the uses. Say for example-Soap can be identified by complexion, cleanliness of body, freshness, fragrance or health.... etc. Because of this, many producers advertise that they are selling health, or they are selling Cine star Complexion or they are selling freshness and so on. (ii) For a Production Manager: Product is the combination of various surfaces and processes (or operations). This is because the production Manager is solely responsible for producing the product. He has to think of the various surfaces by which the product is made of, so that he can plan for processes by which a particular surface can be made and plan for required capacity of the facility by which the surface is produced. While planning he has to see that the required surface is produced by the best and cheapest method (optimally), so as to make the product to face competition in the market. (iii) For a Financial Manager: For him the product is a mix of various cost elements as he is responsible for the profitability of the product. (iv) For a Personnel Manager: For him the product is a mix of various skills, as he is the person who selects and trains the personnel to meet the demand of the skill to produce the product. In general we can define the product as a bundle of tangible and intangible attributes, which along with the service is meant to satisfy the customer wants. Production is the process of using people and machinery to convert materials into finished goods and services. Although the term production is sometimes used interchangeably with manufacturing, production is a broader term and includes a number of non-manufacturing processes. For example, production encompasses such extractive industries as fishing, lumber, and mining. Production also applies to the creation of services. Services are intangible outputs of the production system. They include outputs as diverse as trash hauling, education, haircuts, tax accounting, health delivery systems, mail services, transportation, and lodging.
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Production is a process whereby raw material is converted into semi- finished products and thereby adds to the value of utility of products, which can be measured as the difference between the value of inputs and value of outputs. Production function encompasses the activities of procurement, allocation and utilization of resources. The main objective of production function is to produce the goods and services demanded by the customers in the most efficient and economical way. Therefore efficient management of the production function is of utmost importance in order to achieve this objective. (i) Production by Disintegration: By separating the contents of Crude oil or a mixture the desired products are produced. For example the crude oil is disintegrated into various fuel oils. Similarly salt production is also an example for product produced by disintegrated. We can use Mechanical or Chemical or both technologies to get the desired product, so that it will have desired use value. (ii) Production by Integration: In this type of Production various Components of the products are assembled together to get the desired product. In this process, Physical and Chemical Properties of the materials used may change. The examples are: Assembly of Two wheelers, four wheelers and so on. (iii) Production by Service: Here the Chemical and Mechanical Properties of materials are improved without any physical change. The example for this is Heat Treatment of metals. In real world, a combination of above methods is used.In general production is the use of any process or procedure designed to transform a set of input elements into a set of output elements, which have use value and economic value. Management can be explained as an art or science, (in fact it is a combination of art and science) of getting things done by the people, by planning, coordinating, organizing, directing and controlling the activities to meet specified goals, with in the frame work of agreed policies. The above explanation put emphasis on getting things done, Planning, Organizing, Coordinating, and controlling and specific objectives and agreed policies. Meaning and Definition of Production: Production may be defined as conversion of inputs-men, machine, materials, money, methods and management (6Ms) into output through a transformation process. Output may be goods produced or services rendered. Systems Aspects of Production Function INPUTS Men Machines Material Money Methods Management OUTPUT TRANSFORMATION (CONVERSION) PROCESS Goods Produced OR Services Rendered

Feedback Information/Control SYSTEM ASPECTS OF PRODCUTION/OPERATIONS FUNCTION This figure explains the systems aspect of production/operations function of an organization. The organization received several inputs as indicated on the left hand side and converts them into useful products or services using its facilities. In the process of conversion, definitely, there will be some
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deviation in the products attributes like quality, size, shape and number of units produced. Just to cope up with the predetermined plans and policies, it is highly essential to communicate these deviation to the input stage in the form of feedback for making necessary corrections. Inputs: Some inputs are used up in the process of creating goods or services; others play a part in the creation process but are not used up. To distinguish between these, input resources are usually classified as: transformed resources those that are transformed in some way by the operation to produce the goods or services that are its outputs transforming resources those that are used to perform the transformation process. Inputs include different types of both transformed and transforming resources. Three types of resource that may be transformed in operations are: materials the physical inputs to the process information that is being processed or used in the process Customers the people who are transformed in some way. Many people think of operations as being mainly about the transformation of materials or components into finished products, as when limestone and sand are transformed into glass or an automobile is assembled from its various parts. But all organizations that produce goods or services transform resources: many are concerned mainly with the transformation of information (for example, consultancy firms or accountants) or the transformation of customers (for example, Hair dressing or hospitals). The two types of transforming resource are: staff the people involved directly in the transformation process or supporting it Facilities land, buildings, machines and equipment. The staff involved in the transformation process may include both people who are directly employed by the organization and those contracted to supply services to it. They are sometimes described as labor. The facilities of an organization including buildings, machinery and equipment are sometimes referred to as capital. Outputs The principal outputs of a doctor's surgery are cured patients; the outputs of a nuclear reprocessing plant include reprocessed fuel and nuclear waste. Many transformation processes produce both goods and services. For example, a restaurant provides a service, but also produces goods such as food and drinks. Transformation processes may result in some undesirable outputs (such as nuclear waste in the example above) as well as the goods and services they are designed to deliver. An important aspect of operations management in some organizations is minimizing the environmental impact of waste over the entire life cycle of their products, up to the point of final disposal. Transformation processes A transformation process is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients. Where the inputs are raw materials, it is relatively easy to identify the transformation involved, as when milk is transformed into cheese and butter. Where the inputs are information or people, the nature of the transformation may be less obvious. For example, a hospital transforms ill patients (the input) into healthy patients (the output).
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Transformation processes include: changes in the physical characteristics of materials or customers changes in the location of materials, information or customers changes in the ownership of materials or information storage or accommodation of materials, information or customers changes in the purpose or form of information changes in the physiological or psychological state of customers. Often all three types of input materials, information and customers are transformed by the same organization. One useful way of categorizing different types of transformation is into: manufacture the physical creation of products (for example cars) transport the movement of materials or customers (for example a taxi service) supply change in ownership of goods (for example in retailing) service the treatment of customers or the storage of materials (for example hospital wards, warehouses). A sample list of corrections is presented below: a) Tight quality check on the incoming raw material b) Adjustment of machine settings c) Change of tools d) Change in the production plans, like increase or decrease in volume of production. Meaning of Production Management: Production management is a branch of management which is related to the production function. Production management is the management which by scientific planning and regulation sets into motion the part of an enterprise to which it has been entrusted the task of actual transformation of inputs into outputs. Definition of Production Management Production/Operations management is the process which combines and transforms various resources used in the Production/Operations subsystem of the organization into value added products/services in a controlled manner as per the policies of the organization. Thus production management is concerned with the decision making regarding the production of goods and services at minimum cost according to the demands of the customers through the management process of planning, organizing and controlling. Objectives of Production Management The objective of Production Management is to produce the desired product or specified product by specified methods so that the optimal utilization of available resources is met with, Hence the production management is responsible to produce the desired product, which has marketability at the cheapest price by proper planning, the manpower, material and processes. Production management must see that it will deliver right goods of right quantity at right place and at right price. When the above objective is achieved, we say that we have effective Production Management system. Functions of Production management The functions of Production Management depend upon the size of the firm: In small firms the production Manager may have to supervise production planning and control along with Personnel,
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Marketing, and Finance & Purchase functions. In medium sized firms, there may be separate managers for Personnel, marketing and Finance functions. But the production planning and control and Purchase and stores may be under the control of Production management department. In large sized firms the activities of Production Management is confined to the management of production activities only. (i) Materials: The selection of materials for the product. Production manager must have sound Knowledge of materials and their properties, so that he can select appropriate materials for his product. Research on materials is necessary to find alternatives to satisfy the changing needs of the design in the product and availability of material resumes. (ii) Methods: Finding the best method for the process, to search for the methods to suit the available resources, identifying the sequence of process are some of the activities of Production Management. (iii) Machines and Equipment: Selection of suitable machinery for the process desired, designing the maintenance policy and design of layout of machines are taken care of by the Production Management department. (iv) Estimating: To fix up the Production targets and delivery dates and to keep the production costs at minimum, production management department does a thorough estimation of Production times and production costs. In competitive situation this will help the management to decide what should be done in arresting the costs at desired level. (v) Loading and Scheduling: The Production Management department has to draw the time table for various production activities, specifying when to start and when to finish the process required. It also has to draw the timings of materials movement and plan the activities of manpower. The scheduling is to be done keeping in mind the loads on hand and capacities of facilities available. (vi)Routing: This is the most important function of Production Management department. The Routing consists of fixing the flow lines for various raw materials, components etc., from the stores to the packing of finished product, so that all concerned knows what exactly is happening on the shop floor. (vii) Dispatching: 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. These documents are to be released from Production Management department to give green signal for starting the production. The activities of the shop floor will follow the instructions given in these documents. Activity of releasing the document is known as dispatching. (viii) 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 feedback the progress of the work to the management. This will help the management to evaluate the plans. (ix) 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. This is true because, if the quality inspection is given to production Management, then there is a chance of qualifying the defective products also. For example Teaching and examining of students is given to the same person, and then there is a possibility of passing all the students in the first grade. To avoid this situation an external person does correction of answer scripts, so that the qualities of answers are correctly judged. (x) 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. Whatever may be the size of the firm; Production management department
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alone must do Routing, Scheduling, Loading, Dispatching and expediting. This is because this department knows very well regarding materials, Methods, and available resources etc. If the firms are small, all the above-mentioned functions (i to x) are to be carried out by Production Management Department. In medium sized firms in addition to Routing, Scheduling and Loading, Dispatching and expediting, some more functions like Methods, Machines may be under the control of Production Management Department. In large firms, there will be Separate departments for Methods, Machines, Materials and others but routing, loading and scheduling are the sole functions of Production Management. Production management is thus assigned with the following task: (1) Specifying and accumulating the input resources i.e. Management Machine Men Money Materials Methods (2) Designing and installing the assembly or conversion process to transform the inputs into output, and (3) Coordinating and operating the production process so that the desired goods and services may be produced efficiently and at a minimum cost. Scope of Production Management: Production management mainly associated with the factory management as the problem of production can be removed with the development of factory system. Before the evolution of factory system, manufacturing activities are carried on by single person that pose no problem or very in significant problem of production and therefore question of production management did not arise. But with the inception of factory system, the situation changed and now production management is necessary. Thus, the scope of production management began to develop. Scopes of production management are: (1) Activities relating to Production system Design: Decision relating to the production system design is the firm and fore-most activity of the production management. This activity concerns with the: a) Production engineering. b) Problems regarding design of tools and jigs. c) Design, development and installation of equipment d) Selection of the optimum size of the firm e) The selection of an optimum plant location very much depends upon the decision taken regarding production engineering. f) Decision regarding production system design concerns the use of those techniques which are concerned with work environment and work measurement and includes problem like motion study process analyses. g) Layout of the plant h) Material Handling i) Time Study (2) Activities relating to analysis and control of activities: The next problem arises after the designing of the production system. In includes all decision regarding production administration and therefore all functions of the management so far as they are applicable to the production system from the subject matter of the production management. These activities are: a) Production Planning: The first decision in this regarding is production planning. It includes
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preparation of short term production schedules etc. Various major decisions required in production management are as follows: (i) Production Design: To lead in research and engineering competitions in all areas of our primary business, designing and producing products and services with outstanding quality and inherent customer value. (ii) Process designing and equipment selection: To determine and design the production process and equipment that will be compatible with low cost and high quality. (iii) Layout: To achieve production efficiency and effectiveness through skills, imagination and resourcefulness in plan layout and work method. (iv) Location and Facility Engineering: To locate, design and build efficiency and economic facilities that will yield high value to the company. (v) Human Resource Management: To provide good quality of work life with well designed, safe rewarding jobs, Stable employment and equitable pay in exchange for outstanding individual contribution from employees at all levels. (vi) Maintenance:To achieve high utilization of equipment. (vii) Quality Assurance Control: To attain exceptional quality that is consistent with company policy and marketing objective. (viii) Material Management: To cooperate with supplies and sale control to develop stable, effective and efficient sources of supply for those components that are to be processed from outside sources. Inventory Control: To achieve low investment through scientific inventory control such as: ABC Analysis VED Analysis Economic Order Quantity Inventory Turnover Ratio etc. And through appropriate customer service levels and high facility utilization; b) Production Control: After planning the next step is production control because production plan cannot be activated unless they are properly guided and controlled. For this purpose, production manager has to regulate work assignment, service work progress and check and remove discrepancies, if any, in the actual and planned performances of production manager has to look after the production control activity through: (i) Control on inventory such as raw materials purchased parts, finished goods etc. (ii) Control on work-in-progress through production control. (iii) Control of quality through process control. Major Decision Areas of Production Management Production management involves the following major decisions: 1) Strategic Decisions: Strategic decisions are taken at top level management. Some examples of strategic decisions are: (i) Warehouse Location (ii) Distribution systems (iii) Building a new plant (iv) Mergers and Acquisitions (v) New Product Planning. (vi)Compensation planning (vii) Quality assurance planning (viii) R&D planning (ix) Forming new technology department (x) Dropping a product from the existing product mix. (xi) Social Responsibility planning etc. The types of decision taken at this level soften highly unstructured in nature. 2) Tactical Decisions: Tactical decisions are taken at middle level management. Some examples of tactical decisions are:
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(i) Pricing a product (ii)Product improvement through analysis. (iii)Preventive maintenance policy (iv)Budget analysis (v) Short term forecasting

value

(vi) Make or buy Analysis (vii)Credit evaluation (viii)Plant layout (ix)Project scheduling (x) Reward system design (xi)Buying equipments etc

The type of decision taken at this level is mostly semi-structured in nature. 3) Operational Decisions: Operational decisions are taken at bottom level management. Some examples of operation all level decisions are: (i) Designing sampling plan to inspect the raw materials at stores while receiving materials from vendors (ii)Deciding price discount at salesman level in (vi)Order Entry the field (vii)Production scheduling (iii)Scheduling of maintenance manpower (viii)Inventory Control (iv)Machine loading (ix)Buying software (v) Daily operator scheduling (x) Approving loans etc Benefits of Production Management Raw Materials: A strong production management is able to analyze the different options available for the raw materials and resources necessary for production and to procure materials of the right quality and at the right price. The optimal materials for a company are not necessarily the highest quality or lowest price available but are instead the materials best suited for a company's production model. Strong production management system is able to find dependable suppliers who offer just the right materials. Production Process: Managing the production process is the most important function of a production management department. The department must decide how many workers are necessary, which equipment should be used, and what process will provide the best product to meet customer needs. A strong production management department will streamline the production process so that it costs the least amount of money while still maintaining the necessary level of quality. Customer Satisfaction: By ensuring a quality product, keeping costs low and delivering products in a timely manner, a successful production management team helps a company attract and retain customers. Adding to a company's customer base brings in profits and is the primary benefit of effective management of the production process. Investor Confidence: Because effective production management contributes to the profitability of a company, it lends that company an image of success and contributes to investor confidence. Fortune companies understand this principle better than most businesses. By attracting investors, a wellmanaged company can attain more capital, allowing it to further improve or expand its business. In the final analysis, strong production management makes a business successful because it attracts money through both profits and investment.

S.No. 1. 2. 3. 4. 5. 6. 7. 8.

Product The end product is tangible. These can be produced for stock. The production process is complex. Manufacturing is capital intensive. It requires long lead times. There is little contact with ultimate customer. Demand for products varies weekly, monthly and variable on seasonable basis. Production quality can be easily determined.

Services Services are intangible & perishable. Services are non-inventoriable. There is a simple processing. Operation may be labour intensive. It requires short lead times. There is high contact with clients or customer. Demand for services commonly variable on hourly, daily and weekly basis. Service quality determined with difficulty.

Responsibilities of Production manager The production manager forms a very important and defining part of the organization structure of an engineering company. The responsibilities of a production manager can be summarized as follows. 1) Forecasting the requirements of the production in order to achieve the production target. 2)Making most efficient utilization of the available sources for production. 3) Minimizing throughput time and work in process inventory. This can be achieved by systematic production planning and also by very efficient execution of the plans. 4) One of the most important responsibility of a production manager deals with reducing material handling cost, which generally is achieved by the use of efficient material handling system and also by using plant layouts which must be developed in a proper or correct way. 5) Reducing the quality cost with the help of analysis of non-conformances on periodic basis and also by following suitable actions (both corrective and preventive). 6) Building team spirit among the workmen and also motivating by means of personal involvement. This task of motivation can also be achieved by designing and implementing suitable financial incentive schemes. 7) To device accurate methodology involving method study of manufacturing, along with the other engineering economic principles. 8) Improving the productivity level of the workers on continuous basis by workmens training and by bringing into use the standards of the performance derived from work measurement studies etc. Emerging role of production managers o Take part in strategic decision making of company o Take part in the implementation and use of enterprise resource planning in the company. o Automate processes as per the requirements of the company o Enhance the research and the development effort in developing self-relevant new technologies. o Reduce lag in implementation of projects. o Protect environment by implementing environment protection norms. Recent trends in production and operations management Worker involvement Global market place Production/operations strategy Re-engineering Total quality management Environmental issues Flexibility Corporate downsizing Time reduction Supply chain management Technology Lean production
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Problems of Production Management The problems faced by production manager are as follows: 1. Problem of plant location before the production process is determined: the production manager has to decide the place at which he has to set-up his factory. He has to choose the best locality in order to economise the cost of production. In order to select the best locality, he has to weigh the pros and cons of various factors, such as nearness to raw materials, transportation, warehousing, banking and other related facilities. 2. Problem of plant layout: It implies arrangement of plant and machineries and furniture and fixture in such a way that it occupies minimum space in the factory. This minimises not only the space but also facilitates easy movement of materials, men and finished goods. In addition to the layout of building, production manager has to solve other problems such as lighting, ventilation, airconditioning, sanitation, noise control, etc. 3. Problem of product designing: The selection of the design of the product is another problem faced by production manager. Any change in the design of the product will affect the design of the plant and its layout which will prove costly and complex for the enterprise. So, the design problem should be considered in advance. 4. Problem of material and production control: One of the problems faced by production manager is to ensure ready availability of materials to ensure continuity in production. With a view to take advantage of reduced cost of material and to avoid excess losses and wastages, various techniques of material control, such as deciding Economic Order Quantity (EOQ), level setting, ABC analysis, perpetual stock taking system must be decided. Production planning and control techniques are essential to keep up promised delivery date. The production manager must also decide the production capacity. He has to plan the flexible schedules, work load of men and machines and assess the flow of production from machine to machine. 5. Problem of quality Customer satisfaction, to a greater extent, depends upon the quality of the products. The quality of goods must fulfil the norm set by ISI and ISO series. The production manager must consider product inspection and statistical quality control techniques to ensure quality of goods. 6. Problem of personnel: By far this is the most serious problem faced by production manager. If demand of the workers is not fulfilled, they can resort to strikes and lockouts. Labour unrest will lead to inefficiency and consequently loss of output, both in terms of quantity and quality. 7. Problem of cost of production: The selling price depends upon the cost of production. If the cost of production is high, selling price will also be high. Consumers may find it difficult to buy costlier products. On the other hand, if the competitors price is less, his sales will increase. Thus, the production manager is in a dilemma as to what price he has to charge for the goods. 8. Problem of environment: The functioning of a factory is affected by various economic and noneconomic environmental factors, such as social, cultural, political, technological, natural, and historical. The production manager has to take into account all these factors so that the adverse effects may be solved by taking suitable measures.

Production Planning and Control

industry. The small entrepreneur possessing the ability to look ahead, organize and coordinate and having plenty of driving force and capacity to lead and ability to supervise and coordinate work and simulates his associates by means of a programme of human relation and organization of employees, he would be able to get the best out of his small industrial unit. Gorden and Carson observe production; planning and control involve generally the organization and planning of manufacturing process. Especially it consists of the planning of routing, scheduling, dispatching inspection, and coordination, control of materials, methods machines, tools and operating times. The ultimate objective is the organization of the supply and movement of materials and labour, machines utilization and related activities, in order to bring about the desired manufacturing results in terms of quality, quantity, time and place. Meaning: Production planning means to fix the production goals and to estimate the resources which are required to achieve these goals. It prepares a detailed plan for achieving the production goals economically, efficiently and in time. It forecasts each step in the production process. It forecasts the problems, which may arise in the production process. It tries to remove these problems. It also tries to remove the causes of wastage. Definition, According to Ray wild, Production Planning is concerned with the determination, acquisition and arrangement of all facilities necessary for future operation. Functions or Objectives of Production Planning 1. 2. 3. 4. 5. 6. Effective utilization of resources. Steady flow of production. Estimate the resources. Ensures optimum inventory. Co-ordinates activities of departments. Minimize wastage of raw materials. 7. Improves the labour productivity. 8. Helps to capture the market. 9. Provides a better work environment. 10. Facilitates quality improvement. 11. Results in consumer satisfaction. 12. Reduces the production costs.

1. Effective utilization of resources: Production planning results in effective utilization of resources, plant capacity and equipments. This results in low-cost and high returns for the organization. 2. Steady flow of production: Production planning ensures a regular and steady flow of production. Here, all the machines are put to maximum use. This results in a regular production, which helps to give a routine supply to customers. 3. Estimate the resources: Production planning helps to estimate the resources like men, materials, etc. The estimate is made based on sales forecast. So production is planned to meet sales requirements. 4. Ensures optimum inventory: Production planning ensures optimum inventory. It prevents overstocking and under-stocking. Necessary stocks are maintained. Stock of raw material is maintained at a proper level in order to meet the production demands. Stock of finished goods is also maintained to meet regular demands from customers. 5. Co-ordinates activities of departments: Production planning helps to co-ordinate the activities of different departments. For e.g. the marketing department co-ordinates with production department to sell the goods. This results in profit to the organization. 6. Minimize wastage of raw materials: Production planning minimizes wastage of raw materials. It ensures proper inventory of raw materials and materials handling. This helps to minimize wastages
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of raw material. It also ensures production of quality goods. This result in a minimum rejects. So proper production planning and control results in minimum wastage 7. Improves the labour productivity: Production planning improves the labour productivity. Here, there is maximum utilization of manpower. Training is provided to the workers. The profits are shared with the workers in form of increased wages and other incentives. Workers are motivated to perform their best. This results in improved labour efficiency. 8. Helps to capture the market: Production planning helps to give delivery of goods to customers in time. This is because of regular flow of quality production. So the company can face competition effectively, and it can capture the market. 9. Provides a better work environment: Production planning provides a better work environment to the workers. Workers get improved working conditions, proper working hours, leave and holidays, increased wages and other incentives. This is because the company is working very efficiently. 10. Facilitates quality improvement: Production planning facilitates quality improvement because the production is checked regularly. Quality consciousness is developed among the employees through training, suggestion schemes, quality circles, etc. 11. Results in consumer satisfaction: Production planning helps to give a regular supply of goods and services to the consumers at far prices. It results in consumer satisfaction. 12. Reduces the production costs: Production planning makes optimum utilization of resources, and it minimizes wastage. It also maintains optimum size of inventories. All this reduces the production costs.

Production Control
Activities involved in handling materials, parts, assemblies, and subassemblies, from their raw or initial stage to the finished product stage in an organized and efficient manner. It may also include activities such as planning, scheduling, routing, dispatching, storage, etc. Production control may be defined as the process of planning production in advance of operations; establishing the exact route of each individual item, part of assembly; setting and finishing dates for each important item, assembly and the finished products, and releasing the necessary orders as well as initiating the required follow-up to effectives the smooth functioning of the enterprises. According to Henry Fayol, production control is the art and science of ensuring that all which occurs is in accordance with the rules established and the instructions issued. Thus, production control regulates the orderly flow of materials in the manufacturing process from the raw material stage to the finished product. Objectives of Production Control The success of an enterprise greatly depends on the performance of its production control department. The production control department generally has to perform the following functions: Provision of raw material, equipment, machines and labour. To organize production schedule in conformity with the demand forecasts. The resources are used in the best possible manner in such a way that the cost of production is minimized and delivery date is maintained. Determination of economic production runs with a view to reduce setup costs. Proper co-ordination of the operations of various sections/departments responsible for production. To ensure regular and timely supply of raw material at the desired place and of prescribed quality and quantity to avoid delays in production.
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 To

perform inspection of semi-finished and finished goods and use quality control techniques to ascertain that the produced items are of required specifications. It is also responsible for product design and development. Levels of Production Control Production control starts with some particular goal and formulation of some general strategy for the accomplishment of desired objectives. There are three levels of production control namely programming, ordering and dispatching. 1. Programming plans the output of products for the factory as a whole. 2. Ordering plans the output of components from the suppliers and processing departments. 3. Dispatching considers each processing department in turn and plans the output from the machine, tools and other work centers so as to complete the orders by due date. Factors Determining Production Control Operations The nature of production control operations varies from organization to organization. The following factors affect the nature and magnitude of production control methods in an organization. Nature of production: In job-oriented manufacturing, products and operations are designed for some particular order which may or may not be repeated in future. Hence production usually requires more time, whereas in a continuous manufacturing system inventory problems are more complex but control operations are rather simple due to fixed process. In mixed stock and custom manufacturing systems the problem of control is further complicated due to simultaneous scheduling of combined process. Nature of operations/activities: In intermittent manufacturing system the operations are markedly varied in terms of their nature, sequence and duration. Due to this the control procedure requires continuous modifications and adjustments to suit the requirements of each order. Magnitude of operations: Centralized control secures the most effective co-ordination but as an organization grows in size, decentralization of some production control functions becomes necessary. The degree to which the performance of an activity should be decentralized depends upon the scope of operations and convenience of their locations. Planning and control are interrelated and interdependent. Planning is meaningless unless control action is taken to ensure the success of the plan. Control also provides information feedback which is helpful in modifying the existing plans and in making new plans. Similarly, control is dependent on planning as the standards of performance are laid down under planning. Therefore, production and control should be considered an integrated function of planning to ensure the most efficient production and regulation of operations to execute the plans successfully. Production planning and control may be defined as the direction and coordination of the firms material and physical facilities towards the attainment of pre-specified production goals in the most efficient available way. It is the process of planning production in advance of operations, establishing the exact route of each individual item, part or assembly, setting starting and finishing dates for each important item or assembly and finished products, and releasing the necessary orders as well as initiating the required follow up to effectuate the smooth functioning of the enterprise. Thus, production planning and control involves planning, routing, scheduling, dispatching and expediting to coordinate the movements of materials, machines and manpower as to quantity, quality, time and place. It is based upon the old adage of first plan your work and then work your plan.

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Objectives of Production Planning and Control The main objective of production planning and control is to ensure the coordinated flow of work so that the required numbers of products are manufactured in the required quantity and of required quality at the required time at optimum efficiency. In other words, production planning and control aims at the following purposes: Continuous Flow of Production: It tries to achieve as smooth and continuous production by eliminating successfully all sorts of bottlenecks in the process of production through well-planned routing and scheduling requirements relating to production work. Planned Requirements of Resources: It seeks to ensure the availability of all the inputs i.e. materials, machines, tools, equipment and manpower in the required quantity, of the required quality and at the required time so that desired targets of production may be achieved. Co-ordinated work Schedules: The production activities planned and carried out in a manufacturing organization as per the master schedule. The production planning and control tries to ensure that the schedules to be issued to the various departments/units/supervisors are in co-ordination with the master schedule. Optimum Inventory: It aims at minimum investment in inventories consistent with continuous flow of production. Increased Productivity: It aims at increased productivity by increasing efficiency and by being economical. This is achieved by optimizing the use of productive resources and eliminating wastage and spoilage. Customer Satisfaction: It also aims at satisfying customers requirements by producing the items as per the specifications or desires of the customers. It seeks to ensure delivery of products on time by co-coordinating the production operations with customers orders. Production and Employment Stabilization: Production planning and control aims at ensuring production and employment levels that are relatively stable and consistent with the quantity of sales. Evaluation of Performance: The process of production planning and control is expected to keep a constant check on operations by judging the performance of various individuals and workshops and taking suitable corrective measures if there is any deviation between planned and actual operations. The system of production planning and control serves as the nervous system of a plant. It is a cocoordinating agency which co-ordinate the activities of engineering, purchasing, production, selling and stock control departments. An efficient system of production planning and control helps in providing better and more economic goods to customers at lower investment. It is essential in all plants irrespective of their nature and size. The importance of production planning and control are summarized below: Better Service to Customers: Production planning and control, through proper scheduling and expediting of work, helps in providing better services to customers is terms of better quality of goods at reasonable prices as per promised delivery dates. Delivery in time and proper quality, both help in winning the confidence of customers, improving relations with customers and promoting profitable repeat orders. Fewer Rush Orders : In an organization, where there is effective system of production planning and control, production, operations move smoothly as per original planning and matching with the promised delivery dates. Consequently, there will be fewer rush orders in the plant and less overtime than, in the same industry, without adequate production planning and control. Better Control of Inventory: A sound system of production planning and control helps in maintaining inventory at proper levels and, thereby, minimizing investment in inventory. It requires lower
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inventory of work-in-progress and less finished stock to give efficient service to customers. It also helps in exercising better control over raw-material inventory, which contributes to more effective purchasing. More Effective Use of Equipment: An efficient system of production planning and control makes for the most effective use of equipment. It provides information to the management on regular basis pertaining to the present position of all orders in process, equipment and personnel requirements for next few weeks. The workers can be communicated well in advance if any retrenchment, lay-offs, transfer, etc. is likely to come about. Also, unnecessary purchases of equipment and materials can be avoided. Thus, it is possible to ensure proper utilization of equipment and other resources. Reduced Idle Time: Production planning and control helps in reducing idle time i.e. loss of time by workers waiting for materials and other facilities; because ensures those materials and other facilities are available to the workers in time as per the production schedule. Consequently, less man-hours are lost, which has a positive impact on the cost of production. Improved Plant Morale: An effective system of production planning and control co-ordinates the activities of all the departments involved in the production activity. It ensures even flow of work and avoids rush orders. It maintains healthy working conditions in the plant thus, there is improve plant morale as a by-product. Good public image: A proper system of production planning and control is helpful in keeping systematized operations in an organization .Such an organization is in a position to meet its orders in time to the satisfaction of its customers. Customers satisfaction leads to increased sales, increased profits, industrial harmony and, ultimately, good public image of the enterprise. Lower capital requirements: Under a sound system of production planning and control, everything relating to production is planned well in advance of operations. Where, when and what is required in the form of input is known before the actual production process starts .Inputs are made available as per schedule which ensures even flow of production without any bottlenecks .Facilities are used more effectively and inventory levels are kept as per schedule neither more nor less. Thus, production planning and control helps, in minimizing capital investment in equipment and inventories.

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UNIT II
Types of Production System: There are mainly two main production systems: Types of Production System Continuous Production System (Production to Stock) Intermittent Production System (Production to Order)

Mass Production System Production

Process Production Job Production System

Batch Production

(A) Continuous Production System: It involves a continuous or almost continuous physical flow of material. It makes use of special purpose machines and produces standardized items in large quantities. Such processes are adopted by concern which produces goods or services continuously by putting them through a series of successive connected operations in anticipation of customer demand and rather than in response to customer orders. Examples: Examples of industry using such technology are: Petroleum Industry, Chemicals Industry, Steel and Sugar Industry Classification of Continuous Production Industries: (i) Analytical Industry: An analytical industry like oil industry breaks up their materials into several parts along with its process of production. (ii) Synthetical Industry: A Synthetical industries like current industry uses several raw materials, mixes them up and manufacture a product through the process of production. Classification of Continuous Production System: (1) Mass Production: This system of production is used by concerns where manufacturing is carried on continuously in anticipation of demand though demand of the product may not be uniform throughout the year. Standardization is the keynote of mass production. This system may also be called Flow Production System. This system is useful on single purpose type of machines and where standardized products are manufactured through standardized plant machineries and processes. Moreover this system requires huge investments in machines are equipment. (2) Process Production: This system is an extended form of mass production where production is carried on continuously through a uniform predetermined sequence of operations. Generally under this system finished product of once process is used in the next process as a raw material till the last process. Large industries like petroleum refining, heavy chemical industries generally use this system of production. Under this system, generally one principal raw material is transformed into several product (may be called by products) at different stages of operations. For example crude oil is processed into Kerosene, gasoline and other products. (3) Intermittent Production System: Intermittent production system situations are those where the facilities must be flexible enough to handle a wide variety of products and sizes or where the basic nature of activity imposes change of important characteristics the input. Under this system no
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single sequence of operations is appropriate and therefore standardized materials or machines cannot be used. Under this system of manufacturing production is done in lots rather than on a continuous flow basis. It is done more often on the basis of customer orders. The finished product is heterogeneous but within a range of standardized options assembled by the producers. Since production is partly for stock and partly for customer demand, there are problems to be met in scheduling, forecasting control and co-ordination. Examples of such industries are: Auto-mobile Industry Electrical Goods, Manufacturing plants Printing press etc. Classification of Intermittent Production System: Intermittent production system may be divided into two types, namely (1) Job Production: In this system, goods are produced according to the orders of the customers. Continuous demand of such items is not assured and therefore production is done only when the orders for the manufacturing of items are produced from the customers. As the need of each customer differ the materials, plants and equipments to be used also differ and therefore each product is a class by itself constitutes a distinct and separate job for production purposes. (2) Batch Production : Under this system, the manufacturing is done in Batches or groups or lots either on the basis of customers order or with a hope of a continuous demand of the product. Under this system, medium scale production is warranted. The best example of this type of production system is chemical industry where different medicines are produced in batches. Both job or batch production is similar in nature and almost has the same feature except in regard to the quantity of production. PRODUCT DESIGN Product design is a strategic decision as the image and profit earning capacity of a small firm depends largely on product design. Once the product to be produced is decided by the entrepreneur the next step is to prepare its design. Product design consists of form and function. The form designing includes decisions regarding its shape, size, color and appearance of the product. The functional design involves the working conditions of the product. Once a product is designed, it prevails for a long time therefore various factors are to be considered before designing it. These factors are listed below: (a) Standardization (g) Product simplification (b) Reliability (h) Quality Commensuration with cost (c) Maintainability (i) Product value (d) Servicing (j) Consumer quality (e) Reproducibility (k)Needs and tastes of consumers. (f) Sustainability Above all, the product design should be dictated by the market demand. It is an important decision and therefore the entrepreneur should pay due effort, time, energy and attention in order to get the best results. DESIGN OF PRODUCTION SYSTEM Production system is the framework within which the production activities of an enterprise take place. Manufacturing process is the conversion process through which inputs are converted into outputs. An appropriate designing of production system ensures the coordination of various
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production operations. There is no single pattern of production system which is universally applicable to all types of production system varies from one enterprise to another. MANUFACTURING PROCESS The nature of the process of production required by these three different types of production system are distinct and require different conditions for their working. Selection of manufacturing process is also a strategic decision as changes in the same are costly. Therefore the manufacturing process is selected at the stage of planning a business venture. It should meet the basic two objectives i.e. to meet the specification of the final product and to be cost effective. TYPES OF MANUFACTURING PROCESS The manufacturing process is classified into four types. (i) Jobbing production (ii) Batch production (iii) Mass or flow production (iv) Process Production (i) Jobbing Production: - Herein one or few units of the products are produced as per the requirement and specification of the customer. Production is to meet the delivery schedule and costs are fixed prior to the contract. (ii) Batch Production: - In this, limited quantities of each of the different types of products are manufactured on same set of machines. Different products are produced separately one after the other. (iii) Mass or flow production: Under this, the production run is conducted on a set of machines arranged according to the sequence of operations. A huge quantity of same product is manufactured at a time and is stocked for sale. Different product will require different manufacturing lines. Since one line can produce only one type of product, this process is also called as line flow. (iv) Process Production: Under this, the production run is conducted for an indefinite period. FACTORS AFFECTING THE CHOICE OF MANUFACTURING PROCESS Following factors need to be considered before making a choice of manufacturing process.

a) Effect of volume/variety: This is one of the major considerations in selection of manufacturing

process. When the volume is low and variety is high, intermittent process is most suitable and with increase in volume and reduction in variety continuous process become suitable. The following figure indicates the choice of process as a function of repetitiveness. Degree of repetitiveness is determined by dividing volume of goods by variety. b) Capacity of the plant: Projected sales volume is the key factor to make a choice between batch and line process. In case of line process, fixed costs are substantially higher than variable costs. The reverse is true for batch process thus at low volume it would be cheaper to install and maintain a batch process and line process becomes economical at higher volumes. c) Lead time: - The continuous process normally yields faster deliveries as compared to batch process. Therefore lead-time and level of competition certainly influence the choice of production process. d) Flexibility and Efficiency: - The manufacturing process needs to be flexible enough to adapt contemplated changes and volume of production should be large enough to lower costs.
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Hence, it is very important for entrepreneur to consider all above mentioned factors before taking a decision regarding the type of manufacturing process to be adopted as for as SSI are concerned they usually adopt batch processes due to low investment

Mass production: Manufacture of products in large quantities as a result of standardization, specialized labour, and mechanization. Specialization: Dividing work into its simplest components to permit concentration in performing each task. A key factor in making mass production possible is specialization, the dividing of work into its simplest components so workers can concentrate on performing each task. The father of this approach was Frederick W. Taylor, whose efforts in the late nineteenth and early twentieth centuries were devoted to achieving industrial efficiency by reducing and simplifying jobs. Mechanization: Use of machines to perform work previously performed by humans. Once jobs were separated into smaller tasks, managers could consider the possibility of mechanization, the use of machines to perform work previously performed by people. Before the Industrial Revolution, work was performed primarily by people and animals. In 1850s, the typical American worker spent 70 hours per week on the job and produced an average of 25 cents worth of goods per hour. The average American farmer produced enough food for himself and five others. Today, the average American working a 40-hour week and, with machines, produces goods having 39 times the value of their counterpart of the mid-nineteenth century; and the todays farmer produces enough food for themselves and 92 others. Standardization: Production of uniform and interchangeable goods and parts.The third component of a mass production systemstandardization involves the production of uniform, interchangeable goods and parts. Although production of virtually identical products is taken for granted today, this was not always the case. Rest portion through Power point presentation
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