CHAPTER NO.

-01 (PRODUCTION & PRODUCTION SYSYTEM)

1.1.1 Meaning of Production System: The production system is an industrial
system that supports manufacturing and logistics. They also involve flows of raw
materials, equipment, and event information, as there’s usually paperwork involved.
Also, The limits on a production system include its capacity and the quality of the
finished product.
It is a process that puts intangible inputs like ideas, creativity, research, knowledge,
wisdom, etc. in use or action. Also, It is a way that transforms (convert) tangible
inputs like raw materials, semi-finished goods, and unassembled goods into finished
goods or commodities
1.1.2 Definition of Production System: “The methods, procedure or
arrangement which includes all functions required to accumulate (gather) the
inputs, process or reprocess the inputs, and deliver the marketable output
(goods).”
1.1.2 Characteristics of Production System:
 Production is an organized activity.
 The system transforms the various inputs into useful outputs.
 Production system does not operate in isolation from the other organizational
systems.
 There exists a feedback about the activities which is essential to control and
improve system performance.
1.2 Types of Production Systems: The production system of an organization is
that part, which produces products of an organization.
Classification of Production System: Production systems can be classified as Job
Shop, Batch, Mass and Continuous Production systems.
1.2.1 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. The distinguishing feature
of this is low volume and high variety of products. A job shop comprises of general
purpose machines arranged into different departments. Each job demands unique
technological requirements, demands processing on machines in a certain sequence.
Characteristics
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
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.
Advantages:
1. Because of general purpose machines and facilities variety of products can be
produced.
2. Operators will become more skilled and competent, as each job gives them
learning opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
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.
1.2.2 BATCH PRODUCTION: Batch production is defined by American
Production and Inventory Control Society (APICS) "as a form of manufacturing in
which the job passes through the functional departments in lots or batches and each
lot may have a different routing. It is characterized by the manufacture of limited
number of products produced at regular intervals and stocked awaiting sales.
Characteristics
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
4. When manufacturing lead time and cost are lower as compared to job order
production.
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.
6. Job satisfaction exists for operators.
Limitations
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
1.2.3 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.
Characteristics:
1. Standardization of product and process sequence.
2. Shorter cycle time of production.
3. Large volume of products.
4. Material handling can be completely automatic.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Production planning and control is easy.
Advantages:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
1.2.4 CONTINUOUS PRODUCTION: Production facilities are arranged as per the
sequence of production operations from the first operations to the finished product.
The items are made to flow through the sequence of operations through material
handling devices such as conveyors, transfer devices, etc.
Characteristics:
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.
Advantages
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
Limitations
1. Flexibility to accommodate and process number of products does not exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited.
1.3.1 What is a product life cycle?

A product life cycle is a management tool that evaluates a product’s journey

from development to withdrawal from the market.it includes four stages-
introduction, growth, maturity, and decline.
The term product life cycle refers to the length of time from when a product
is introduced to consumers into the market until it's removed from the
shelves. This concept is used by management and by marketing
professionals as a factor in deciding when it is appropriate to increase
advertising, reduce prices, expand to new markets, or redesign packaging.
The process of strategizing ways to continuously support and maintain a
product is called product life cycle management.
KEY TAKEAWAYS
 A product life cycle is the amount of time a product goes from being
introduced into the market until it's taken off the shelves.
 There are four stages in a product's life cycle—introduction, growth,
maturity, and decline.
 A company often incurs higher marketing costs when introducing a
product to the market but experiences higher sales as product adoption
grows.
 Sales stabilize and peak when the product's adoption matures, though
competition and obsolescence may cause its decline.
 The concept of product life cycle helps inform business decision-making,
from pricing and promotion to expansion or cost-cutting.
How the Product Life Cycle Works
Products, like people, have life cycles. The life cycle of a product is broken
into four stages—introduction, growth, maturity, and decline.
A product begins with an idea, and within the confines of modern business,
it isn't likely to go further until it undergoes research and development
(R&D) and is found to be feasible and potentially profitable. At that point, the
product is produced, marketed, and rolled out. Some product life cycle
models include product development as a stage, though at this point, the
product has not yet been brought to customers.
As mentioned above, there are four generally accepted stages in the life
cycle of a product. Here are details about each one.
Introduction Stage: The introduction phase is the first time customers are
introduced to the new product. A company must generally includes a
substantial investment in advertising and a marketing campaign focused on
making consumers aware of the product and its benefits, especially if it is
broadly unknown what the item will do.
During the introduction stage, there is often little-to-no competition for a
product, as competitors may just be getting a first look at the new offering.
However, companies still often experience negative financial results at this
stage as sales tend to be lower, promotional pricing may be low to drive
customer engagement, and the sales strategy is still being evaluated.
Growth Stage: If the product is successful, it then moves to the growth
stage. This is characterized by growing demand, an increase in production,
and expansion in its availability. The amount of time spent in the introduction
phase before a company's product experiences strong growth will vary from
between industries and products.
During the growth phase, the product becomes more popular and
recognizable. A company may still choose to invest heavily in advertising if
the product faces heavy competition. However, marketing campaigns will
likely be geared towards differentiating its product from others as opposed to
introducing the goods to the market. A company may also refine its product
by improving functionality based on customer feedback.
Maturity Stage: The maturity stage of the product life cycle is the most
profitable stage, the time when the costs of producing and marketing
decline. With the market saturated with the product, competition now higher
than at other stages, and profit margins starting to shrink, some analysts
refer to the maturity stage as when sales volume is "maxed out".
During the maturity stage, competition is at the highest level. Rival
companies have had enough time to introduce competing and improved
products, and competition for customers is usually highest. Sales levels
stabilize, and a company strives to have its product exist in this maturity
stage for as long as possible. A new product needs to be explained, while a
mature product needs to be differentiated.
Decline Stage: As the product takes on increased competition as other
companies emulate its success, the product may lose market share and
begin its decline. Product sales begin to drop due to market saturation and
alternative products, and the company may choose to not pursue additional
marketing efforts as customers may already have determined whether they
are loyal to the company's products or not.
Should a product be entirely retired, the company will stop generating
support for it and will entirely phase out marketing endeavors. Alternatively,
the company may decide to revamp the product or introduce a next-
generation, completely overhauled model. If the upgrade is substantial
enough, the company may choose to re-enter the product life cycle by
introducing the new version to the market.
The stage of a product's life cycle impacts the way in which it is marketed to
consumers. A new product needs to be explained, while a mature product
needs to be differentiated from its competitors.
1.3.2 Process Management Lifecycle: The process management lifecycle is a
model for the continuous implementation and improvement of processes
and business process management in a company. The lifecycle consists of
the following six phases:
1. Process strategy – Develop a plan for process improvement.
2. Process documentation – Document the processes currently in use.
3. Process optimization – Optimize processes based on the defined
process strategy.
4. Process implementation – Introduce the optimized processes into the
existing process landscape.
5. Process execution – Carry out the new processes and record their
performance.
6. Process controlling – Use the recorded performance data and key
figures to check whether guideline values are being achieved or whether
there are bottlenecks and potential for further improvement.
1.4.1 What is a Product
A product is an item for sale. Most importantly, it is a physical item that is
tangible. We can sell, buy, store, and transport products. When the sale is
complete, we can move the product, return it, or even replace it for another
product. If you look around you, you’ll see many products around you. Some
examples of products include mobile phones, laptops, vehicles, furniture, and
food items.
In manufacturing, the manufactures procure products as raw materials and
sell their products as finished goods. They make each and every product at a
cost and sell it at a price. Moreover, the price of a product can vary depending
on the quality, the marketing, and, the market.
However, in marketing, we use the term product to refer to anything that we
can sell regardless of whether it is a physical item or not. By this logic,
sometimes we call flights, insurance policies, software services, etc. also as
products.

1.4.2 What is a Service

We can define a service as a transaction that does not involve transfer of
physical goods from the seller to the buyer. It is basically a work that a
person/persons do for another individual. These are activities other people,
companies, the government do for you. Education, health care, banking,
insurance, and transportation are some examples of services. Services are
intangible and non-physical, unlike goods, which have a physical existence.
For example, when you a book a holiday, the booking agent is providing you
with a service; the booking itself is abstract – you cannot touch it, store it or
transport it.
The government of a country also provides various public services for its
citizens. For example, it ensures citizens’ security via security services (army,
police, paramedics, fire brigade, etc.) Healthcare, urban planning, waste
management, and public broadcasting are some other government services.
Sometimes, it can be difficult to identify the difference between product and
service as both are interconnected. For instance, in healthcare, both products
and services are essential for a patient to get well. Here, products are drugs
and medical and diagnostic devices, while services are the expertise of
doctors and nurses.

1.4 Difference between Product and Service

Definition: Products are objects or systems made available for consumer
use while services are transactions where no physical goods are transferred
from the seller to the buyer
Tangibility: While products are tangible, services are intangible.
Production: Products are manufactured, stored, and transported while
services cannot be manufactured, stored, or transported.
Examples: Electronic devices, furniture, food items, and vehicles are some
examples of products while cleaning, car repair, medical check-ups,
haircuts, etc. are some examples of services.
Return: Moreover, we can return or replace the products, but not so with
services.
Inconsistency: Products sold can be identical, but each delivery of a
particular service is never exactly the same as the previous services or
future services.