INTRODUCTION TO PRODUCTION SYSTEMS

A Typical Production System

INPUT Transformation OUTPUT

Ÿ Manpower
Ÿ Machines Product
Ÿ Materials or
Ÿ Money Service
Ÿ Management
Ÿ Information
Ÿ Energy
Fig. 1.1 Input-Output System

Production System transforms a set of inputs into desirable outputs

Transformations can be :
ŸPhysical as in Manufacturing
ŸLocational as in Transportation
ŸExchange as in Retailing
ŸStorage as in Warehousing
ŸPhysiological as in Hospitals
ŸAttitudinal as in Welfare Organisation
ŸInformational as in Communication
ŸGratificational as in Entertainment

Aim of Production System: To produce goods and services required for human consumption in the right quantity
with the right quality at the right time in the most economical way.

A Typical Production System has:

Ÿ Value Addition at different operations.

Ÿ Use of various tools & techniques.
Ÿ Performance Indicators like Production, Productivity, Efficiency, Effectiveness.
Ÿ Production System can be Mass/Continuous, Batch, Job, Project.

Classification of Production System:

on the basis of
Size – small, medium & large
Input – Man, m/c, material, money, management, information, energy
Output – Goods and services.
Production is defined as 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.

A system is defined as a collection of elements which are interdependent and independent to achieve objective.

- A system consists of many sub-systems.

- A car is a system. Take out carburetor (sub-system) & the system as car cease to exist.
- A heap of sand is not a system. Take out a particle of sand and heap of sand is still there.

Generalized Model of Production System:

SOCIAL EXTERNAL ENVIRONMENT LEGAL

TRUST INTERNAL ENVIRONMENT TEAMWORK

PLANNING, ORGANISING, BUDGETING

DIRECTING, CONTROLLING

C
O
I
P M
N E
O M PURCHASING PROCESS O N C
L U I
MAN U O O
I N N PRODUCT
MATERIAL CONVERSION T V N
T I P OR
M/C PROCESS P A O
I C U SERVICE
MONEY U T M
C A T MAINTENANCE MARKETING T I I
A T
O C
L I
N
O
N

USE OF
TOOLS & TECHNIQUES

LEADERSHIP TRAINING

BUSINESS TECHNICAL PHYSICAL

Fig. 1.2 Generalized Model of a Production System

Categories of Production Systems:

1. Make to Stock
e.g. TV, Motors, Nuts & Bolts, Bearings etc.
2. Make to Order
e.g. Custom Tailored Clothing, Special Purpose M/c etc.
3. Assemble to Order
e.g. Computer System
Comparison:

Particulars Make to Stock Make to Order Assemble to Order

Product Range Low High Medium / High

Production Volume High Low Medium

Lead Time Low High Medium

Customer Producer Limited / Distant High at sales & High at sales level
Interface design level

Handling of Safety stock of Planning of excess Planning of standard

Fluctuations product units capacity & raw modules & parts
in demand material stock

Basis of plannning End item forecasts Back logs and marketing Back logs and
intelligence report trend analysis

Inventory level High inventory level & Low inventory level & Major modules / parts
associated inventory associated inventory held in inventory
carrying costs carrying costs

Product Category Standardised products Special products Modular parts /

& costs with loser price / unit (high variety) Sub-assembly
& high cost / unit Medium / high
price / unit

Types of Production System:

1. Project Production
2. Job Production
3. Batch Production
4. Mass Production
5. Continuous Production

1. Project Production
The work is carried out at the site of the work rather than in factory. All resources such as tool, material, labour etc.
are brought at the site of production. Generally construction projects and heavy and large product based projects
like ship building are example of project production.
A fixed position plant layout is recommended for this type of production system.

2. Job Production
The Job production system is for low production volume.
Following are its characteristics:
1. Commonly used to meet a particular customer need.
2. Production lot size is generally small.
3. Product variety is high.
4. Production equipments are mostly general purpose and flexible to meet specific cusomer order which varies
from time to time.
5. Highly skilled labour is needed to handle the equipments, as variety and product range are very high.
3. Batch Production
The Batch production system is for medium production volume of same variety. At regular intervals, the production
order is repeated.
Following are its characteristics:
1. Commonly used to meet repeated customer orders.
2. Production lot size is medium and in batches.
3. Product variety is moderate.
4. Production equipments are general purpose but suitable for higher production volume.
5. Specially designed jigs and fixtures may be used to reduce set-up time and increase production rate.
6. Reasonably high skilled labour is required but less as compared to Job production. This is due to relatively less
variety and variation.

4. Mass Production
The Mass production system is for high production volume of identical parts.
Following are its characteristics:
1. Particularly suited for high demand items.
2. Production lot size is very high and production rate is continuous.
3. Product variety is very low.
4. Special purpose tools and equipments may be needed.
5. Skill Level of workers may be moderately low as repeated work on same machine is needed.
6. Entire plant is designed to cater to few special varieties of products.
7. Requirement of special purpose machine for special purpose operation needs higher investments.

5. Continuous Production
The continuous production system is for continuous production of a product.
Following are its characteristics:
1. Particularly suited for very high and regular demand items.
2. Production is continuous.
3. Product variety is very low.
4. Special purpose tools and equipments are needed.
5. Skill Level of workers are low as continuous work on same machine is needed.
6. Plant is generally automated and computer controlled.
7. Higher investments are required for system monitoring and controlling.

Fixed Process Cellular Product

Position Layout Layout Layout
Layout Layout

General Purpose Special Purpose

Equipment

Labo
ur Sk
ill Le
vel

Factors
)
Volume
nt ity (
on Qua
ucti
Prod

Project Job Batch Mass Continuous

Production Production Production Production Production

Fig. 1.3 Type of Production System : Effect on some factors and preferred layout
 High
P Legends:

J P: Project Production
J: Job Production
B: Batch Production
M: Mass Production
B C: Continuous Production
Product
Variety
M
C
High
Low
Production Volume
Comparison between Production System to produce products & Production System to produce services

Production System to produce products Production System to produce services

Tangible Intangible and perishable; consumed in the

process of their production

Can be produced to inventory for "off the shelf" Availability achieved by keeping the productive
availability system open for services

Minimal contact with ultimate consumer High contact with clients or consumers

Complex and interrelated processing Simple processing

Demand on system variable on weekly, monthly Demand commonly variable on hourly, daily and
and seasonal bases weekly bases

Markets served by productive system are regional, Markets served by productive system are usually
national and international local

Large units that can take advantage of economics Relatively small units to serve local markets
of scale

Location of system is in relation to regional, Location dependent on location of local customers,

national and international markets clients and users

Service Organizations
The output of certain production systems is a service rather than a tangible product. e.g. Hospitals for health care,
Beauty Salons for good looks, Consultation Firms for advice, Banks for loans and money related services, Airlines
for transportations etc.

In service organization the output is consumed in the process of its production.

Better management of the system that provides the service, consistent with customer preferences and
requirements, will lead to greater profitability for the firm.

Distinctive Features of Service Organizations

1 ) Customer is a participant in service department

Input/ Resource
Immediate interaction with operation
2) Production and Consumption occur simultaneously
Services not inventoried
Capacity to provide service must be available when demanded
3) Service capacity is time perishable
Synchronous demand/ capacity
Forecasting/ capacity adjustment challenging
4) Site selection dictated by customer location
Multiple, local area sites
5)Operations are labour intensive
New technology difficult to implement
Employees characteristics influence the services
6) Services are intangible
Units of output difficult to define/ measure
Q.C. system difficult to establish
Life Cycle Approach to Production Management

Life cycle of a production system has different phases, which are same as that of human beings. We can identify
eight distinct phases as:
1. Birth of the production system
2. Product Design & Process Selection
3. Design of the system
4. Manning of the system
5. Start-up of the system
6. System in the steady state
7. Revision of the system
8. Termination of the system

Some typical products at various levels of product life-cycle are shown below:

Output
Declining Drop in
Growth Saturation
Rapid Output
Slow Growth
Initial (6) (7)
Growth (5)

(8)
(5) Termination
(1) (2) (3) ... (4) ...
Idea Product Designing
Conceived Design System

6 Months to 3 years Time

Start up

Fig. 1.4 Stages in Product Life cycle

Output

Laptop Black & White TV

Colour TV
Publishing
Super
Super Diode Radio
Computer
Conductor
Nuclear Fibre Satellite
Nuclear
Devices Optics TV
Devices
for for
warfare warfare

6 Months to 3 years Time

Start up

Fig. 1.5 Typical Products at various levels of PLC in Indian Industry

Every stage in the production system is concerned with different level of managerial decisions as shown in Figure:

Stage Decision

Birth of System Goals?

Product / Service?

Product Design & Form & Appearance of product?

Process Selection Technology – how should the product be made?

Facility Location
Design of system Physical Layout
Determine demand, perceived quality

Manning the Assigning jobs to workers

system How job to be performed, measured?
Compensation of worker

Start up of How to get system into operation?

the system How long it will take to reach desired stage?

The system in How to run system- day to day?

Steady state improve the system?
deal with operational problems?

New technology threats/ opportunities

Revision of markets
Revision of the
Newer methods of manufacture
system
Newer products
Innovation

How does a system die?

Termination of How to salvage resources?
system Sell out/ merger/ sell m/cs
MAJOR CONSIDERATIONS at various stages

Birth of System Start up of the system

STAGE I : MAJOR CONSIDERATIONS STAGE V : MAJOR CONSIDERATIONS
· Future long term trends of growth Problems of
- New Products · Installation
- Technologies · Training of Personnal
- Consumer Preference Patterns · Coordination
- Industrial Climate · Learning Phase
- Govt. Policies

· Basic Desire, Commitment, Experience

· Available or Projected Resources

The system in Steady state
STAGE VI : MAJOR CONSIDERATIONS
· Setting Production targets
Product Design & Process Selection
· Scheduling,sequencing of jobs
STAGE II : MAJOR CONSIDERATIONS
· During Design of Product or Service · Inventory Control
- Customer Needs
- Behavior of Materials · Quality Control
- Available Processes of Manufacture
- Economics · Production Control

· During Process Selection · Cost Control

- Available Technologies
- Economics · Maintenance
- Required Specifications

Design of system Revision of the system

STAGE III : MAJOR CONSIDERATIONS STAGE VII : MAJOR CONSIDERATIONS
· SURVEYS AND FEASIBILITY STUDIES · Evaluation of competitor's product
· ECONOMICS OF · Newer Methods of manufacture
- Mass Production
- Batch Production · Consideration of New products or innovating
- Job Production existing product with better design or function
- Project Production
· Revision of New Markets for existing
· LAYOUT PLANNING products
· QUALITY ASSURANCE

· DEMAND FORECASTING

Termination of system

STAGE VIII : MAJOR CONSIDERATIONS

Manning the system · Evaluation of existing resources for salvation
purpose
STAGE IV : MAJOR CONSIDERATIONS
· Work Measurement · Consideration of better option available like
sell out / merger with other company / selling
· Setting of Production Standards various machines separately.

· Wage Incentives

· Capacity Determination

· Planning Resource Acquisitions

Examples

Set out below are some suggested examples of products that are currently at different stages of
the product life-cycle:

INTRODUCTION GROWTH MATURITY DECLINE

Third generation Portable Personal Typewriters

mobile phones DVD Players Computers

E-conferencing Email Faxes Handwritten letters

All-in-one racing Breathable synthetic Cotton t-shirts Shell Suits

skin-suits fabrics

iris-based personal Smart cards Credit cards Cheque books

identity cards

Productivity

Productivity is defined as the ratio of output to inputs

Labor Productivity = Units Produced / Hours Worked

Capital Productivity = Output / Capital Input
Material Productivity = Output / Materials Input

Productivity measures the capability of processing inputs to convert to outputs.

It simply measures how much output is produced relative to the inputs of labor, capital (plant and equipment), and
technology.
A process may be productive but may not be efficient.

Factors that facilitate productivity improvement:

Technological Innovation:
- faster machines, eliminate heavy physical work and repetitive operations
- increased capital investment, complex machinery, skilled operators

Effective Management
- Employee motivation, better marketing, etc.

Efficiency

Efficiency denotes the maximum utilization on one’s given resources

Efficiency is generally a relative term, used for comparison. Its focus is on the best utilization of resources.
Elimination of some adjacent bank branches as a result of merge of two banks would attain greater efficiency, while
a termination of employment due to teller machines would cause greater productivity.