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Nature and Scope of Production Management-1

Production management deals with decision-making related to production processes to produce goods or services according to specifications, quantity, and schedule while minimizing costs. Some key objectives of production management are maximizing customer satisfaction, quality output, resource utilization, and profits while minimizing costs, inventory levels, and production cycle times. Production can be viewed as a system that converts inputs to outputs through a transformation process, as an organizational function, and as a means of creating utility for customers through changes to products.

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3K views5 pages

Nature and Scope of Production Management-1

Production management deals with decision-making related to production processes to produce goods or services according to specifications, quantity, and schedule while minimizing costs. Some key objectives of production management are maximizing customer satisfaction, quality output, resource utilization, and profits while minimizing costs, inventory levels, and production cycle times. Production can be viewed as a system that converts inputs to outputs through a transformation process, as an organizational function, and as a means of creating utility for customers through changes to products.

Uploaded by

Irfan Khan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Nature and Scope of Production Management

 
E. S. Buffa defines production management as follows: ‘Production management deals
with decision-making related to production processes so that the resulting goods or
services are produced according to specifications, in the amount and by the schedule
demanded and out of minimum cost’.

Joseph G .Monks defines Operations Management as the process whereby resources,


flowing with in a defined system, are combined and transformed by a controlled
manner to add value in accordance with policies communicated by management.
Objectives of Production Management:

Some of the important objectives of production management are:

(i) Maximum customer satisfaction through quality, reliability, cost and delivery time.
(ii) Minimum scrap/rework resulting in better product quality.
(iii) Minimum possible inventory levels (i.e. optimum inventory levels).
(iv) Maximum utilisation of all kinds of resources needed.
(v) Minimum cash outflow.
(vi) Maximum employee satisfaction.
(vii) Maximum possible production (i.e., outputs).
(viii) Higher operating efficiency.
(ix) Minimum production cycle time.
(x) Maximum possible profit or return on investment.
(xi) Concern for protection of environment.
(xii) Maximum possible productivity.

NATURE OF PRODUCTION/OPERATIONS:

The nature of production or operations can be better understood by viewing the


manufacturing function as:

(i) Production/operations as a system,


(ii) Production/operations as an organisational function,
(iii) Production/operations as a conversion or transformation process and
(iv) Production/operations as a means of creating utility.

These four distinct views are discussed in the following section.

 Production/Operations as a System

This view is also known as “systems concept of production”. A system is defined as the
collection of interrelated entities. The systems approach views any organisation or
entity as an arrangement of interrelated parts that interact in ways that can be specified
and to some extent predicted. Production is viewed as a system which converts a set of
inputs into a set of desired outputs. A production system has the following elements or
parts :

(i) Inputs,
(ii) Conversion process or transformation process,
(iii) Outputs
(iv) Transportation subsystem,
(v) Communication subsystem and
(vi) Control or decision making subsystem.
 Production as a Conversion/Transformation Process

The conversion or transformation sub-system is the core of a production system because


it consists of processes or activities wherein workers, materials, machines and
equipment are used to convert inputs into outputs. The conversion process may include
manufacturing processes such as cutting, drilling, machining, welding, painting, etc.,
and other processes such as packing, selling, etc. Any conversion process consists of
several small activities referred to as “operations” which are some steps in the overall
process of producing a product or service that leads to the final output.

 Production as a Means of Creating Utility:

Production is defined as the process of adding to the value of outputs or the process of
creating utility in outputs. “Utility” is the power of satisfying human needs. During the
process of converting the raw materials into finished goods, various types of utilities are
created while adding value to the outputs. These

Types of utilities are:

 Form utility:

This is created by changing the size, shape, form, weight, colour, smell of inputs in
order to make the outputs more useful to the customers. For example, iron ore is
changed to steel, wood is changed to furniture, etc.

 Place utility:

This is created by changing the places of inputs or transporting the inputs from the
source of their availability to the place of their use to be converted into outputs. For
example the iron ore and coal are transported from the mines to the steel plant to be
used in the conversion process.

 Time utility:

This is created by storage or preservation of raw materials or finished goods which are
in abundance sometime, so that the same can be used at a later time when they become
scarce due to higher demand exceeding the quantity available.

 Possession utility:

This is created by transferring the possession or ownership of an item from one person
to another person. For example, when a firm purchases materials from a supplier, the
possession utility of the materials will increase when they are delivered to the buying
firm.
 Service utility:

Which is the utility created by rendering some service to the customer. For example, a
doctor or a lawyer or an engineer creates service utility to a client/customer by
rendering service directly to the client/customer.

 Knowledge utility:

This is created by imparting knowledge to a person. For example, a sales presentation


or an advertisement about some product communicates some information about the
product to the customer, thereby imparting knowledge.

Scope of Production Management.

Production Management is a vast concept it involves a huge chain. Production starts


with input and ends with output i.e finished product. Following are the scope of
production management

1. Location of Facilities
The selection of location is a key decision as large investment is made in
building, land, and machinery.

2. Plant Layout & material handling


Plant layout refers to the physical arrangement of facilities. Material handling
refers to the moving of material from the storeroom to the machine & from
machine to the next during the process of manufacturing.

3. Product Design
Product design deals with the conversion of the ideas about the product into the
reality
4. Process Design
It is the decision making on overall process route for converting the raw material
into the finished goods

5. Production Planning & Controlling ( P.P.C)


P.P .C can be defined as the process of planning the production in advance,
setting the exact route of each item, fixing the starting & finishing dates for each
item to give production orders to shops & to follow up the progress of products
according to the orders.

6. Quality Control
Quality control may be defined as a system that is used to maintain a desired
level of quality in a product & service.

7. Material Handling
Material management is that aspect of management function which is primarily
concern with the acquisition control & use of the needed material.

8. Maintenance Management
Maintenance deal with taking care of factory layout, types of machinery. This is
essential for equipment & machinery which are a very important part of the total
production process.

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