Business Production

Process/ Cycle

Topic 3
 Introduction
• As discussed earlier, production refers to the
transformation of inputs into finished goods/ or
creation of services in order to satisfy the customer
needs.
• This uses different inputs mainly including 6M’s
namely, man, material, machine, money, method and
management.
• Production involves application of processes by which
the inputs can be transformed into desired product
(output) of potential utility while improving
properties and adding economic values through the
best method without compromising on quality.
 Blueprint of Production system
• An enterprise in the beginning needs to define its
production system that is considered as the
framework within which all production related
activities and operations take place.
• Manufacturing process is the transformation
process through which inputs(transforming) are
converted into outputs(transformed).
• An appropriate designing of production system
ensures the coordination of various production
activities and operations.
• There is no single pattern of production system
which is universally applicable in all kinds of
enterprises, this varies from one enterprise to
another depending upon many parameters.
 Types of Production Process
• There are mainly three types of production
systems as mentioned below;
– Continuous/Mass production
– Job or unit production
– Intermittent/Batch production
 Continuous/Mass production
• It is used when we need to produce standardized
products with a standard set of process and operation
sequence in anticipation of demand. This ensures
continuous production of out put.
– It is also termed as mass flow production or assembly line
production.
• This system results in less work in process (WIP)
inventory and high product quality but involves high
capital investment in machinery and equipment.
– This ensures very high rate of production as we need not to
intervene once the production has begun.
– The system is appropriate in plants where large volume of
small variety of output is produced. e.g. oil refineries, cement
manufacturing and sugar factory etc.
 Characteristics of Continuous/ Mass
production
• As same product is manufactured for sufficiently long
time, machines can be laid down in order of
processing sequence.
• Standard methods and machines are used during part
manufacture.
• Most of the equipment’s are semi automatic or
automatic in nature.
• Material handling is also automatic (such as
conveyors).
• Semi-skilled workers are normally employed as most
of the facilities are automatic.
• As product flows along a pre-defined line,
planning and control of the system is much easier.
• Cost of production per unit is very low owing to
the high rate of production.
• In process inventories are low as production
scheduling is simple and can be implemented with
ease.
 Job or Unit production
• It involves production as per customer's
specifications. This ensures the simultaneous
production of large number of batches/orders.
Each batch or order comprises of a small lot of
identical products and is different from other
batches.
– It requires comparatively smaller investment in
machines and equipment.
– It is flexible and can be adapted to changes in
product design and order size without much
inconvenience.
– This system is most suitable when
heterogeneous products are produced against
specific orders. In this system products are
made to satisfy a specific order.
– However that order may be produced- only
once or at irregular time intervals as and when
new order arrives or at regular time intervals to
satisfy a continuous demand
 Characteristics of Job or Unit
Production
• Machines and methods employed should be general
purpose as product changes are quite frequent.
• Man power should be skilled enough to deal with
changing work conditions.
• Schedules are actually non-existent in this system as
no definite data is available on the product. In
process inventory will usually be high as accurate
plans and schedules do not exist.
• Product cost is normally high because of high
material and labor costs.
• Grouping of machines is done on functional basis
(i.e. as lathe section, milling section etc.) This
system is very flexible as management has to
manufacture varying product types. Material
handling systems are also flexible to meet
changing product requirements.
 Intermittent/ Batch Production
• This is concerned with the production of different
types of products in small quantities usually
termed as batches.
• A batch contains the similar products but in small
quantity. This is used to meet a specific order or to
meet a continuous demand.
• Batch can be manufactured either only once or
repeatedly at irregular time intervals as and when
demand arise or repeatedly at regular time
intervals to satisfy a continuous demand.
• Under this system the goods may be produced
partly for inventory and partly for customer's
orders. For example, components are made for
inventory but they are combined differently for
different customers. e.g. automobile plants,
printing presses, electrical goods plant are
examples of this type of manufacturing.
 Characteristics of Intermittent/
Batch Production
• As final product is somewhat standard and
manufactured in batches, economy of scale can
be availed to some extent.
• Machines are grouped on functional basis similar
to the job shop manufacturing.
• Semi-automatic, special purpose automatic
machines are generally used to take advantage of
the similarity among the products.
• Labor should be skilled enough to work upon
different product batches.
• In process inventory is usually high owing to the
type of layout and material handling policies
adopted.
• Semi-automatic material handling systems are
most appropriate in conjunction with the semi-
automatic machines.