RIZAL TECHNOLOGICAL UNIVERSITY

Boni Ave. Mandaluyong City

COLLEGE OF EDUCATION
Bachelor of Technical Vocational Teacher Education

PRODUCTION OF
GOODS AND
SERVICES

Submitted by:

Chiva, Angelica Jane B.

Mauricio, Jovino Jake B.
Villanueva, Allea D.
Viray, Roselyn

Submitted to:
Mr. William De Ramos II

CED11-301A – VISUAL GRAPHICS DESIGN

PRODUCTION OF GOOD AND SERVICES

Production

 The process creating the products and services that a firm sells its to market.
 It involves processing and assembling materials using simple tools, machinery
and equipment.
 Production requires a set of inputs to yield a set of outputs.
 Efficient utilization of inputs (materials, labor, equipment, methods, management
and money) to produce outputs (goods and services) at the least cost.

Production Process

 The raw material inputs are converted into finished products ready for market
distribution through successive stages of:

1. Operation – represents the main step in a process, method, or procedure

where the raw material is changed into something else.
2. Assembly – Is putting parts together to form a final product.
3. Finishing – may mean painting, varnishing, polishing, trimming, cleaning
and glazing among others.
4. Inspection – makes sure that the operation has been carried out correctly
as to quality and quantity.

Factors of Production

In economics, the major factors of production are land, labor, capital, and
entrepreneurial ability. The following are their definitions:

 Land – includes natural resources such as forests, mountains, and bodies of

water like rivers, lakes, and seas.
 Labor – refers to both physical and mental efforts like the works of farmers,
fishermen, workers, clerks, lawyers, teachers, and doctors, among others.
 Capital – pertains to machines, equipment, buildings, and other physical
resources, which are used in the production of goods and services.
 Entrepreneurial ability – coordinates the other factors of production such as
land, labor and capital.

Costs of Production

 Costs of production represent the payments for the factors of production.

 Producers must choose productive resources, which are abundant in supply.
The cost of a product is made up of three parts: direct materials, direct labor, and
manufacturing overhead.

 Direct materials – are material inputs that become part of the product.
 Direct labor – includes the workers whose outputs are closely related to or
associated with the making of the product.
 Manufacturing overhead – are all other costs incurred in making of the products
but do not become part of the product. Examples of this type of costs are:

1. The use of the buildings, machine and equipment and their maintenance
and replacement.
2. Power, fuel, lubricants, water, heating, and supplies used to keep the
manufacturing resources running.
3. Salaries or wages of all workers who are not directly involved in the
making of the products, such as the owner, manager, and the foreman.
4. Transport costs of raw materials.
5. Office costs such as stationery, printing, telephone and postage.

Making Production Efficiency Your Goal

As production manager, you should be concerned with the economical and

efficient utilization of inputs to produce output.

In order to better illustrate the concept of productivity, consider materials and labor as
input, in the following manner:

 Productivity of materials – we say that there is an increase of 10% in utilization of

materials if a skillful tailor is able to cut 11 suits from a bale of cloth, from which
an unskilled tailor can only cut 10.
 Productivity of labor – if a worker who has usually been producing 40 units of
product per day was able to raise his production output to 60 units because of
improved work methods, then, the productivity of the worker has increased by
50%.
 Productivity of machines – a machine was observed to produce an average of
1,000 pieces of a particular component per hour.

Produce of Quality Product

You are in business not only to earn profit for yourself, but also to serve the
needs of your target market.

How to Develop and Improve Product Quality

You can achieve quality control by focusing your attention on the following areas:
 1. Control manufacturing information – you should see to it that your
production workers are given complete, easy – to – understand, clear, and
simple instructions of the process of production.
2. Control purchases and storage of raw materials – you should obtain
the correct materials of defined quality from suppliers, and see to it that
these are appropriately stored to prevent spoiling or deterioration.
3. Control manufacturing process – prevent the fabrication of defective
products by instituting inspection points or simple routine checks on
important processes or steps.
4. Control finished products – verify by means of adequate tests and
criteria to check whether the finished product meets the quality standard
or not.
5. Control measuring instruments and test equipment – schedule
periodic calibrations and adjustments or maintenance of test and process
equipment for adequate control.
6. Control corrective action – use information from control areas 1-5 to
ensure that deficiencies affecting quality are promptly and systematically
detected and corrected.

Manage and Control Your Inventories Properly

When you are in business, you need to keep sufficient stocks of raw materials,
in-process goods, and finished goods in order to meet your production and sales
targets.

How to Control the Inventory

The basic idea behind inventory control is to operate to your business effectively
with the least amount of stock. To be able to do this, you should know:

 When to order
 How often to order
 How much to order

The Importance of Marketing

There is one thing that entrepreneurs must embrace on a lifetime when he or she
engages in a business.

Marketing Concept and Philosophy

Any form of business has to exist not because of the existence of a product or
service that the entrepreneur has developed, but because of the preconceived notion
that there is a sure market or market potentials for the product or service.
The Market Research

A market research will help entrepreneurs discover who wants to buy the product
or service. In other words, entrepreneurs will be guided as to the particular market
segment.

In specific terms, market research will guide entrepreneurs as to the following:

 Define your product or service.

 Define your market – who are your customers.
 Identify what motivates those customers to buy.
 Price your product or service.
 Reach you customers through advertising, publicity, and sales calls.
 Compete with other companies providing the same product or services.
 Position your products in the market place.
 Cope with outside forces, such as the economy.
 Understand your industry and how your company fits in.
 Evaluate your community.

Where to get Information

Getting vital information is what market research is really all about.

Information in whatever form abound town. Some of the most common sources
of information on potential markets for new products and services can be generated by
way of the following:

1. Library research – the academic and library settings are valuable data
providers, particularly those institutions whose library facilities are updated and
computerized.
2. Questionnaire survey – a survey questionnaire is a basic tool in market
research, whether it is conducted by mail, telephone, or personal interview.
3. Existing research report – if the business proposition refers to an existing
product or services and is deemed to be growing, and hence you are going into
such field of business their must exist information or a subject in the recent years
that could be of help to the entrepreneur.
4. Published market statistics – there are published market statistics for some
product lines by trade associations or private market research organizations,
which entrepreneurs can simply buy or subscribe to.
5. Trade association meetings and trade shows – in the long-term, it pays to be
a member of trade associations.
6. Experts – it should be of help to touch base with real technical experts and
parties who knows about the markets of the product or services.
7. Phantom products – this is done by smart entrepreneurs in developed
countries.
 8. Professional market surveys – these are large and prestigious research
organizations and consulting service companies who published documents like
market indicators, regional, and provincial profiles, investment guides, and other
special series publications that can be of help to entrepreneurs and prospective
business investors.

The Need for Marketing Plan

An author-entrepreneur said that many operations plug along without a business

plan; however, few of them survive without a plan of attack for marketing their business.
A simple, yet effective marketing plan, should have the following contents:

a. Execution strategies – the execution strategies will spell out the difference
between a well-written business plan and a poorly done one.
b. Objective – the marketing objective must be specific as to what is there that
needs to be accomplished.
c. Marketing mix – it defines the position of the business or the product in a
market place.

Channel of Distribution

Channel of distribution refers to the marketing institutions and interrelationships

responsible for the physical flow of good and services from the producer or
manufacturer to consumers or industrial users.

The entrepreneur can use any of the following modalities whichever is

appropriate for his business:

a. Direct marketing – this refers to a system of marketing by which an

organization communicates directly with costumers to generate a response
and/or transactions.
b. Wholesalers – this is where the producers or manufacturers generally
dispose or sell their products, who in turn, sells same to the retailers or end-
users.
c. Agents – if a wholesaler is necessary, the entrepreneur must determine how
to reach them.

Pricing

Price is the value place on goods and services offered to the public. A product or
service may be paid in the form of money or it could be paid with other goods and/or
services.
The Concept of Fair Pricing

Fair pricing is not all about what is good for the buyers or consumers; neither
does it mean making it cheaper.

Basic Pricing Principles

As earlier mentioned, the price you charge to your customers or clienteles will
have direct bearing on the success of the business; hence this aspect must be given
due diligence and care.

In pricing a product or service, the following will serve as a fundamental

guideline:

 All prices must cover costs.

 The best and most effective way of lower sales price is lowering the costs.
 Prices must be regularly upgraded to reflect market developments.
 Prices must be established to ensure sales.
 Product utility, longevity, maintenance, and end use must be judged
continually, and target prices should then be adjusted accordingly.
 Prices must be set to preserve order in the marketplace and;
 Prices must be fixed to support an overall corporate goal.

Pricing a Service

Unlike a product where everything can be quantified to arrive at a product costs,

rendering services involves human efforts and other parameters or factors of production
which are quite difficult to quantify. Nevertheless, among service providers, pricing of
services rendered vary with the type of business, but the same three elements are
present in every situation. The three elements include:

a. Labor cost –this includes salaries, wages, and benefits paid to the
employees, as well as contractors/subcontractors who performed,
supervised, or managed the service business.
b. Overhead expenses – these items include indirect expenses required
to operationalize the business.
c. Profit – this refers to the amount of income earned after all costs of
producing and providing the service have been met.

If you are just starting out, you obviously will not have the skill of a seasoned
professional. If your quote is too low, you will either rob yourself of some profit or
be forced to lower the quality of work to meet the price.
RESOURCES:

Turqueza, H. (2015, June 3). Producing goods-and-services. Retrieved from

https://www.slideshare.net/honeyturqueza/producing-goodsandservices.

When was the last time you said this? (n.d.). Retrieved from
http://www.businessdictionary.com/definition/factors-of-production.html