System approach of production function

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System approach of production function

  1. 1. System Approach ofProduction Function
  2. 2. System Approach of Production Function  A system is the combination of subsystems.  Every system is the sub system of larger system. If we consider a global economic system, a national economy are sub systems. If we consider a national economy is a system, different industries are sub systems. When a industry is a system different organization or firms are sub system An organization is a combination of different components (Departments) working together to achieve specific goal(s). It is a set of different sub-systems ( departments). So it is called a system. Among the different Departments, production management is one of the them.
  3. 3. Contd………. An Organizational Structure as a systemThe Operation Department is considered as POM
  4. 4. Contd……….When considering POM itself POM is system of different sub systems.The components or sub systems are input, process, output, feedback and random fluctuations. Strong interaction makes the production function supportive to meet organizational goal(s).The components of system always inter related and having interaction each other to achieve the same (organizational) goal(s).
  5. 5. The Economic System TransformsInputs to Outputs Random Fluctuations ( Disturbances) Input Process Outputs s Materials, Land Goods and , Labor, Capital Services , Management, Time Conversion Process Feedback loop
  6. 6. Inputs:  Inputs are the basic needs or resources of the production system.  Inputs may be land, building, labour, capital, management, raw material and WIP.  The quality and nature of input determine the quality of output.  Land and building should be located at the facilite area of customers.  Capital should be having low cost (i.e. low cost of capital)  Raw material should have quality and low cost.  Labour or human resource is an important input for production and operation management
  7. 7. Process:  It is the conversion process of inputs to outputs.  It includes machine, equipments, technology, and processing steps.  Major function of the process is creating utility(ies) in inputs (raw materials) and add economic values.  The pace of technology differs in conversion process.  It creates noise, light, wastage, which are not environment friendly.  In the age of consumerism the management should choose environment friendly conversion process.  Selection of appropriate, efficient and
  8. 8. Outputs:  Output Is the desired result of the (production) system.  It will tangible or intangible in nature.  Production organization- tangible (car, cloths ect.)  Service organization- intangible ( bank services, hair services)  Some time outputs may be quasi in nature (mixed)- restaurant  The output should be of desired utility in terms of quality, cost and delivery or of stakeholder’s interest (customer, shareholders)
  9. 9. Random Fluctuations ordisturbances: It is the unplanned or uncontrolled environmental influences in the conversion process that causes planned and actual output differ.It may be categorized as: Internal Factors- Human Resources, Breakdown of machines, supply of raw materials ( controllable but unplanned)External Factors- Electricity supply, flood, earthquake, government policies. ( Uncontrollable and unplanned)
  10. 10. Feedback: Feed back is the control mechanism of the production function which support management whether organizational activities need adjustment?? It has three phases:  Set the goal  Determine the actual result  Comparison with the plane or actual result- ( +, - or = )  + or - result: need adjustment
  11. 11. Conclusion:  POM system is the part of organization that produces the organizational physical product or services.  Inputs are the basic need of production functions.  Conversion process is the process of creation of unility(ies) and economic value added to the inputs.  Output is the desired physical product or services which fulfill the desired of the customer as well as stakeholders.  Random Fluctuations are the unplanned or uncontrolled environmental influences which influence the production process.  Feedback is the control mechanism of the production function. “Production Function is the system of conversion of inputs into outputs with addition of economic values and utility(ies).”
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