Professional Documents
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What is
is Production
Production
What
Production is an outcome of an
economic activity.
Prof. J.R.Hicks defines
Production as "any activity
directed towards the satisfaction
of other peoples wants through
exchange."
What
What is
is Factors
Factors of
of
Production
Production
1) Anything that assist production is
termed as factor of production.
2) But mere existence is not necessarily
a factor of production.
3) It become a factor of production
only when it actually assist or
contributes to production.
Land
1) Land is the original and primary factor of
production.
Features of Land
1) Land is a free gift of
nature.
2) Land has no cost of
production.
3) The supply of land
perfectly inelastic.
4) Land is subject to Law of
Diminishing Return.
LABOUR
1) Labour is a human factor of production.
2) In economics labour is defined asEconomic activity of man with HEAD and
HAND.
3) LABOUR is human factor of any kind,
manual or mental,skilled or unskilled,
scientific or artistic undertaken with a
view of creating or adding utility.
Features of Labour
1) Labour is a human factor.
2) Active factor.
3) Labour cannot be stored.
4) No two labours are identical.
Capital
1) Capital is a man-made resource of
production used to produce further
wealth.
2) It refers to the stock of capital assets
such as factories,machines, tools &
equipments, raw material, transport
vehicles etc
3) Therefore capital is defined as Produced
means of production
Features of
1) Capital
is
man-made
factor
Capital
of production.
2) Supply of capital is elastic.
3) Capital has mobility.
4) All capital is wealth but all
wealth is not capital.
Entrepre
nuer
Features of
Entreprenuer
1) He must be a good
administrator.
2) He must possess
complete knowledge.
3) He must be a person
Production Methods
Production Methods
JOB PRODUCTION
Job production is normally used for the
production of single one-off products. The
products may be small or large and are
often unique. In order to be called job
production, each individual product has
to be completed before the next
product is started. At any one time,
there is only one product being made.
Batch Production
Batch production makes products
in separate groups and the products in
each batch go through the whole process
together. The production process involves
a number of distinct stages and the
defining feature of batch production is
that every unit in the batch must go
through an individual production stage
before the batch as a whole moves on
to the next stage.
Batch Production
Batch production allows firms to use
division of labour in the production
process and it enables economies of scale
if the batch is large enough. It is usually
employed in industries where demand is
for batches of identical products (hot dogs,
bread, buns, doughnuts).
Batch
It also allows each individual batch to be
specifically matched to the demand, and
the design and composition of batches
can easily be altered ( chocolate,
bubblegums, doughnuts).
Flow/Mass Production
This method is used when individual
products move from stage to stage of
the production process as soon as they
are ready, without having to wait for
any other products. Flow production
systems are capable of producing large
quantities of output in a relatively short
time and so it suits industries where
demand for a product is high and
consistent
Flow Production
It also suits the production of large
numbers of a standardised item that only
requires minimal alterations. This is often
why it is often referred to as mass
production. Flow production usually takes
place on a production line - hence the use
of the term production line.
Flow production
Labour costs tend to be relatively low,
because much of the process is
mechanised and there is little physical
handling of products. The constant output
should make the planning of inputs
relatively simple and this can lead to the
minimisation of input stocks through the
use of just-in-time (JIT) stock control
Flow Production
Quality tends to be consistent and high
and it is easy to check the quality of
products at various points throughout the
process. The main disadvantage is the
high initial set-up cost. By definition,
capital intensive, high technology
production lines are going to cost a great
deal of money. In addition, the work
involved tends to be boring, demotivating
and repetitive.
Cell Production
Cell production is a form of flow
production, but instead of each worker
performing a single task, the production
line is split into several self-contained,
mini-production units - known as cells.
Each individual cell produces a complete
unit of work, such as a complete washing
machine motor and not just a small part of
it.
Cell Production
Each cell has a team leader and below
that a single level of hierarchy made up of
multi-skilled workers. The performance of
each cell is measured against pre-set
targets (output levels, quality and lead
times, etc).
Cells are responsible for the quality of
their own complete units of work (total
quality management -
Cell Production
The cell production method has led to:
increased worker commitment and
motivation
job rotation within the cell
increased productivity
CHOOSING
H
MARKET
APPROPRIATE
DEMAND
SIZE OFL
FOR
THE
PRODUCTION
PRODUCT
MARKET
S
FACTORS
ADAPTEDMETHODS
TO
CUSTOME
R
REQUIRE
MENTS
INFLUEN
CING
CHOICE
AVAILABILI
TY OF
OTHER
RESOURCE
S
AMOUNT
OF CAPITAL
AVAILABLE
Quantitative Factors
Qualitative Factors
Site Costs
Infrastructure
transport
communication links
Regional incentives
short term grants
pressure groups
Transport costs
manufacturing businesses need to consider transport
Management preferences
to set up in an area with good quality of life
Labour costs
quality & productivity of labour needs to be considered
Clustering
same businesses locating in one area
Revenue generation
location increases sales due to prestige of area/market
proximity