In Microeconomics , is the act of making things, in particular the act of making Product s that will be traded or sold commercially. Production decisions concentrate on what goods to produce, how to produce them, the '''costs''' of producing them, and optimizing the mix of resource inputs used in their production. This production information can then be combined with market information (like demand and marginal revenue) to determine the quantity of products to produce and the optimum 'pricing'(Imaga, 1994: 384).
(In Macroeconomics , production is measured by Gross Domestic Product and other Measures Of National Income And Output .)
- Equipment is expensive and used for a solitary purpose.
- A very small variety of goods are produced.
- Goods are transported from one fixed work station to another.
- Greater specialisation.
- Optimum utilisation of workers and machinery.
- Low production costs per unit.
- Low stock-piling costs.
- Restricted handling of materials.
- Production control is simplified.
- High sales turnover.
- Division of labour.
- Equipment standardised.
- Products uniform.
- Large capital layout is expensive.
- Inflexible production process.
- Changes or breakdowns in machinery can stunt progress markedly.
- Production is generally fixed.
- Changes in demand are not taken into account.
- General, all-purpose machinery.
- Products are generally capital goods.
- One task must be completed before the next may commence.
- Customers give specifications.
- Production processes are seldom repeated.
- Workers must be highly skilled.
- Control of production is simple.
- Falls between mass production and jobbing.
- One batch of products must be completed before work on the next one may begin.
- Customers give their specifications.
- Similar products produced on a batch basis, in large quantities.
- Greater flexibility in terms of quantity produced, factory layout and manufacturing process.
- Can adjust to changes in demand.
- Less time wasted during machinery-breakdowns.
- Less expensive machinery.
- Products take longer to produce.
- Larger quantities of semi-finished goods must be kept, hence increasing stockpiling costs.
- Cost per unit is generally higher.
- Less exertion
- Less handling
- Happier and more productive in pleasant working conditions
- Fewer accidents
- Less working capital required
- Less money invested in stock
- Increase in factory safety
- Easier production control
- Lower labour, maintenance and transport costs
- High production yield
- Fewer labourer; fewer salaries and wages to pay
- Practical and economical
- Complies with government safety regulations
- Adaptable
- Promote workers' health
- Maximum space (vertical and horizontal) utilised
- A logical, consecutive process
- Materials have to travel the shortest possible distance.
- are built on a broad scale and are easier to maintain. They are used for batch production and jobbing.
- are built to specific requirements and are difficult to resell. They are used for mass production.
- Lifespan
- Training that workers might require
- Availability of replacements
- Effect on factory layout
- Cost of purchase and maintenance
- Resale value
- Utilisation period per day
- Whether or not it can be utilised economically
- Rate of production
- Accuracy
- Availability of parts
- maintenance -- complete overhaul when machinery breaks down
- maintenance -- minor or major repair to prevent breakdown
- maintenance -- inspection of condition
refers to anything which describes how a product will be manufactured.
- Raw material suppliers know exactly what they need to deliver.
- Production department knows exactly what it needs to produce.
- Raw materials can be controlled, ensuring a quality product.
- Customers can expect a certain standard.
- Testing for quality control is easier.
- Assured of a continued relationship with the factory
- Assured of regular orders from the factory
- Regular supply at a reasonable price
- Assured against having to search for suppliers all the time
- Usually assured of a certain quality, quantity and timeous and correct delivery
- Costs reduced
- Job satisfaction is promoted.
- Healthy and safe working environment
- May result in improved wages or salaries
- Knowledge of what is expected
- Regular supply at right place and time
- Lower prices due to reduced production costs
This is a system for determining at which points in the production process deviations and deficiencies emerge.
- Workers and inspectors must be made well aware of the prerequisite standards, and tolerances must be set.
- A suitable number of inspection points must be decided upon.
- Reliable testing and inspecting measures must be used.
- A suitable number of inspections per inspection point must be decided upon.
- Dealers and customers are assured of the quality of the goods that they are purchasing.
- It can serve as a reliable basis for wage incentive schemes.
- Workers are encourage to continue to produce goods of a certain standard.
- Production costs can be lowered.
- It can lead to improved product design and quality.
- is a scientific measure of working methods, with the aim of finding more effective methods, machinery and materials, standardising them and determining a standard time for every method.
- analyses all working methods and the organisation of machinery with a mind to finding more effective production methods.
- is a evaluation of exactly how long it takes suitably skilled workers, labouring at maximum tempo (without adversely affecting health) with standard and according to stipulated requirements, to complete a given task.
- Hygiene requirements for workers
- Firewalls dividing rooms and other parts of the factory
- General safety and security
- Environmental conservation
- Flammable materials stored underground
- Availability of fire-fighting equipment
- Two exits in every room
- Fire escapes
- Structural safety of walls, floors and roofs
- Protection against machinery
- Consulting with the chief accountant to come to a decision on the spending of fixed and working capital so as to obtain an optimum return
- Investigating deviations from set standards and making corrective recommendations
- Compiling a comparison between the different production methods and presenting it to management
- Bookkeeping for all manufacturing expenditure and costs
- Analysing cost components
- Calculating cost price so that a selling price may be set
- The consumer has limited means or buying power.
- The consumer will benefit from a lower selling price.
- The consumer will benefit, too, in a market where supply and demand forces prices down.
- Competitive prices of substitute goods also benefit consumers.
- Provides management with information for decision-making
- Helps to determine the break-even point
- Determines the cost of raw materials, labour and other manufacturing costs for each component and completed product
- Makes easier the adjustment of the selling price for the purposes of competition
- Allows management to analyse unit production costs
- Determines safety margins in production
- --- -- costs of raw materials used to make a specific product.
- --- -- costs of labour used to make a specific product.
- --- -- costs that cannot be charged directly to a specific product.
- --- -- stable costs that occur regardless of whether or not goods are being produced (i.e. rent of factory). These are allocated according to the number of machine hours.
- --- -- changeable overhead costs that vary according to the number of goods produced (i.e. water and lights). These are allocated according to the number of labour hours.
- --- -- costs of raw materials whose role in the manufacturing of a product cannot be easily determined (i.e. glue).
- --- -- costs of labour that cannot be charged to a particular product (i.e. the floor sweeper in a factory).
- Primary production costs = direct labour + direct raw materials
- Overhead expenses = fixed overheads + variable overheads
- Total production costs = primary production costs + overhead expenses
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