The document provides an overview of production management. It defines production as the process of converting raw materials into finished goods through value-addition. Production management refers to applying management principles to oversee production activities and ensure specified products are produced to meet sales targets. The objectives of production management are to produce quality products in the right quantities, at the right time and place, and at the lowest possible cost. The document also describes different production systems based on volume, including job shop, batch, mass and continuous production.

1. PRODUCTION
MANAGEMENT
Chapter 1: Nature & Scope of
Production Management

2. What is Production ?
 Product : It is a bundle of tangible and intangible
attributes which along with the service is meant to
satisfy consumer wants.
 Production : It is a process by which raw materials and
other inputs are converted into finished goods.
It is also defined as “the step-by-step conversion
of one form of material into another form
through chemical or mechanical process to
create or enhance the utility of the product to the
user.”

3. Thus production is a value addition process.
At each stage of processing, there will be
value addition.
• In general defines production as ‘a process
by which goods and services are created

4. Management
Management can be defined as the art and
science of getting things done by the people ,
by planning coordinating , organizing,
directing and controlling the activities to meet
specified goals within the frame work of
agreed policies .

5. Production management
• Production Management refers to the application of
management principles to the production function in a
factory .It is also defined as a management function which
plans, organizes , coordinates ,directs and controls the
material supply and processing activities of an
enterprises so that specified products are produced by
specified methods to meet an approved sales
programme. These activities are being carried out in such
a manner that labor, plant and capital available are used to
the best advantage of the organization .

6. • If the same concept is extended to services
management, then the corresponding set of
management activities is called as operations
management.
• Production management is used for a system
where tangible goods are produced whereas
operations management is used when inputs
are transformed into intangible services. like
banks, airlines, supermarkets etc.

7. Application of management in
production
• Development of factory system of
production : owners and people operating
business are different
• Development of large corporation : many
owners of business which lead to a
necessity to hire people to operate business
• Work of many pioneers of scientific
management.

8. Objective of Production
Management
• Produce the desired/specified product (wanted
by consumers )
• With specified method so that there is an optimal
utilization of available resources
• Produce goods which have marketability at cheapest price
( by proper planning of material , manpower &
processes)to deliver right goods, of right quantity at right
place and right price.

9. Objective of Production
Management
• RIGHT QUALITY: The quality of product is
established based upon the customers needs. The
right quality is not necessarily best quality. It is
determined by the cost of the product and the
technical characteristics as suited to the specific
requirements.
• RIGHT QUANTITY : If they are produced in
excess of demand the capital will block up in the
form of inventory and if the quantity is produced in
short of demand, leads to shortage of products.

10. Objective of Production
Management
• RIGHT TIME :
Timeliness of delivery is one of the important parameter to
judge the effectiveness of production department. So, the
production department has to make the optimal utilization of
input resources to achieve its objective.
RIGHT MANUFACTURING COST :
Manufacturing costs are established before the product is
actually manufactured. Hence, all attempts should be made to
produce the products at pre-established cost, so as to reduce
the variation between actual and the standard (pre-
established) cost.

11. Nature of production
 Production as a system ( set of detailed methods ,
procedures and routines established or formulated to carry out a specific activity , perform a duty
or solve a problem)
i. Production system,
ii.Conversion sub-system and
iii.Control sub-system.

12. PRODUCTION SYSTEM
CONCEPTS
• PRODUCTION SYSTEM
• A system whose function is to convert a set of input into a set of
desired output
• CONVERSION SYSTEM
• A sub-system of the large production system where inputs are
converted into outputs
• CONTROL SYSTEM
• A sub-system of the large production system where a portion of the
output is monitored for a feedback signals to provide corrective action
if required

14. Nature of production
• Production as organization function:
Every organization irrespective of its purpose has a
production function where departments and personnel play a
central role in achieving the objectives of the organization

15. Decision making In production
• Strategic Decision : related to products , processes &
,manufacturing facilities. Major decisions, with strategic
importance & have long term significance
• Operating Decisions :related to planning production to
meet demand and provide reasonable profits for the
organization
• Control decisions: planning and controlling- activities of
workers ,quality of products and services

16. PM Decisions and their Applications

17. Functions of Production Management
Department
1. Materials : selection of materials , should have sound
knowledge of materials and their properties ,so that
appropriate materials are selected. Research on materials
to find alternatives to satisfy the changing needs .
2. Methods: finding the best method for the process which
suits the available resources,& identifying the sequence
of processes
3. Estimating : fix up the production targets and delivery
dates , to keep production costs at minimum
4. Loading & Scheduling : draw time –table for various
production activities , specifying when to start and when
to finish the process required

18. Functions of Production
Management Department
4. Loading & Scheduling : It has to draw the
timings of material movement and plan
activities of manpower. Avoid long queues or
idle time
5. Routing : consists of fixing the flow lines
for various raw materials , components from
the stores to the packing of finished product.

19. Functions of Production
Management Department
6. Machines & equipment: Selection of suitable machinery
for the process desired , designing the maintenance policy and
design of layout of machines are to be taken care .
7.Dispatching : they have to prepare various documents such
as job cards, route sheets move cards inspection cards for
each & every component of the product for starting
production . The activities of the shop floor will follow the
instruction given in the documents . Activity of releasing the
document is called dispatching.

20. Functions of Production
Management Department
8. Expediting (follow up): Expediting
engineer go round the production floor along
with the plans and feedback the progress of
the work to the management. This will help to
evaluate the plan followed by inspection .
9.Evaluation: evaluates its self whether its
contribution in fulfilling the corporate &
departmental objectives

21. Importance of Production Function
• Shorter new-product-lead time
• More inventory turns
• Shorter manufacturing lead time
• Higher quality
• Greater flexibility
• Better customer service
• Reduced wastage

22. Classification of Production System(
according to volume of production)

23. JOB SHOP PRODUCTION
• Job shop production are characterized by manufacturing of
One or Few quantity of products designed and produced
as per the specification of customers within prefixed
time and cost. Eg construction of building
• The distinguishing feature of this is Method is
• Low volume and High variety of products.
• Each job demands unique technological requirements,
demands processing on machines in a certain sequence

24. JOB SHOP PRODUCTION- CHARACTERISTICS
• The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. High customization , high flexibility of equipment
3. Highly skilled operators who can take up each job as a
challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the
requirements of each product, capacities for each work
centre and order priorities.

25. Limitations
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and
hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.

26. Advantages-Job shop production
1. Operators will become more skilled and
competent, as each job gives them learning
opportunities.
2. Full potential of operators can be utilized.
3. Opportunity exists for creative methods
and innovative ideas.

27. Batch production
Batch production is defined “as
• A form of manufacturing in which the job passes through
the functional departments in lots or batches
• It is characterized by the manufacture of limited number
of products produced at regular intervals and stocked
awaiting sales.
Batch production differs from job shop production with
respect to volume & variety. Here volumes are higher as same
or similar products are repeatedly provided. Eg – paints,
icecream , books ,magazine etc

28. Characteristics
• Batch production system is used under the following
circumstances:
• 1. When there is shorter production runs.
• 2. When plant and machinery are flexible.
• 3. When plant and machinery set up is used for the
production of item in a batch and change of set up is
required for processing the next batch.
• 4. When manufacturing lead time and cost are lower as
compared to job order production.

29. Advantages
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job
order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process
number of products.

30. MASS PRODUCTION
– Manufacture of discrete parts or assemblies
using a continuous process are called mass
production.
– This production system is justified by very
large volume of production. The machines are
arranged in a line or product layout. Product
and process standardization exists and all
outputs follow the same path.eg automobiles,tv
,computers etc

31. Characteristics
• Standardization of product and process sequence.
• Dedicated special purpose machines having higher
production capacities and output rates.
• Large volume of products.
• Shorter cycle time of production.
• Lower in process inventory.
• Perfectly balanced production lines.
• Flow of materials, components and parts is continuous and.
• Production planning and control is easy.
• Material handling can be completely automatic.

32. Advantages-Mass production
• 1. Higher rate of production with reduced
cycle time.
• 2. Higher capacity(equipment) utilization
• 3. Less skilled operators are required.
• 4. Low process inventory.
• 5. Manufacturing cost per unit is low.

33. Limitation
• Breakdown of one machine will stop an
entire production line.
• Line layout needs major change with the
changes in the product design.
• High investment in production facilities.
• The cycle time is determined by the slowest
operation

34. CONTINUOUS PRODUCTION
• Used when highly standardized product is desired
in high volumes.
• These systems have almost no variety in output
and hence there is no need for equipment
flexibility. A continous process is the extreme end
of high volume standardised production with rigid
line flows eg – cement, steel , flour, sugar ,
fertilizers etc
•

35. Characteristics
• 1.Dedicated plant and equipment with zero
flexibility.
• 2. Material handling is fully automated.
• 3. Process follows a predetermined
sequence of operations.

36. Advantages
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization
4. Manpower is not required for material handling as
it is completely automatic.
5. Person with limited skills can be used on the
production