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THE PRODUCTION FUNCTION

Production may be defined as the capacity to produce. It may also be defined as an activity
aimed at transforming a good or service into a consumable state. Production is the
functional area responsible for turning inputs into finished outputs through a series of
production processes. The Production Manager is responsible for making sure that raw
materials are provided and made into finished goods effectively. He or she must make sure
that work is carried out smoothly, and must supervise procedures for making work more
efficient and more enjoyable.

Production Concept/ process:

Uncontrollable
Factors e.g.
Hailstone
INPUTS OUTPUTS

Land Transformation Harvest

Labour Corrective growth
Capital, pesticides adjustments
Seeds, fertilizers

Farmers

Feedback

In a manufacturing company, the production function may be split into five sub-
functions:
1. The production and planning department will set standards and targets for each section
of the production process. The quantity and quality of products coming off a production line
will be closely monitored.
2. The purchasing department will be responsible for providing the materials, components
and equipment required to keep the production process running smoothly.
3. The stores department will be responsible for stocking all the necessary tools, spares, raw
materials and equipment required to service the manufacturing process.

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4. The design and technical support department will be responsible for researching new
products or modifications to existing ones, estimating costs for producing in different
quantities and by using different methods. It will also be responsible for the design and
testing of new product processes and product types, together with the development of
prototypes through to the final product. The technical support department may also be
responsible for work-study and suggestions as to how working practices can be improved.
5. The works department will be concerned with the manufacture of products. This will
include the maintenance of the production line and other necessary repairs. The works
department may also have responsibility for quality control and inspection.
A key aspect of modern production is ensuring quality. The term quality means fitness for
purpose i.e. a product; process or service should do exactly what is expected of it. Car plants
like Audi build quality into every stage of the production process. Every employee is
expected to take responsibility for managing quality issues in order to make sure that waste is
minimised and quality maximised. Production and marketing need to work in an integrated
way. Marketing is concerned with knowing and understanding the requirements of
customers, so that production can provide the market led products that are required.
The whole process of transformation can be illustrated as follows

FACTORS OF PRODUCTION
These are Inputs used in the production process to create an output or commodity.
They include -
1. Land: this includes the surface of the earth and anything that nature has freely given
for example forest, fisheries, lakes, air, wind etc.
2. Labour: Human effort of body or mind that is aimed at production and not for personal
pleasure, consider labour mobility – the ease with which labour can be moved from one
location occupationally or geographically.
3. Capital: Includes all those mental resources that assist human labour in the production
processes e.g. machines, computer, vehicles etc.
4. Entrepreneurship: An entrepreneur is a person who undertakes a risky venture or
project. Entrepreneurship means to ‘move’ or ‘undertake.’ An entrepreneur is responsible for

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organising other F.O.P to yield desired output. There are some desirable Qualities of an
Entrepreneur. These are.
- Learner
- High achiever
- Willingness to share knowledge with others in the field
- Willingness to carry out research and development to extend knowledge
- Honesty
- Problem solver
- Knowledgeable

THE PRODUCTION FUNCTION IN THE CONTEXT OF A BUSINESS

ORGANISATION
Before actual production is undertaken in an organisation, a number of decisions have to be
considered. Decisions have to be made on the following: - Product design,
Plant location and Plant layout
1. Product Design
Here a survey is carried out into consumers’ needs, taste, and preference and market
characteristics in order to identify the products to be produced.
Product design also involves determining product characteristics like shape, size, colour,
texture and weight and the type of technology to be used into transforming the product
concept into a physical product.
Cost-benefit analysis also has to be carried out to determine whether actual benefits exceed
the cost of manufacturing the product.

2. Plant Location
After product design, the production manager then has to decide on plant location. Plant
location is the decision to geographically situate the plant.

FACTORS CONSIDERED IN PLANT LOCATION

1. Market for finished goods especially perishable products like bread and milk
2. Presence of transport and communication facilities

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3. Fuel/power especially for those industries that consume a lot of power e.g. textile
industries
4. Raw materials especially for those industries that require bulky raw material e.g. Uganda
Breweries which requires large quantities of water
5. Labour supply in relation to the costs of labour, labour skills and the attitude of labourer
towards work.
6. Political stability
7. Government policy: Government usually encourage industries to locate in backward areas
by giving out incentives such as tax holidays and subsidies.
8. Soil and climate especially for agro-based industries
9. Personal factors
10. Safety requirements
11. Plant layout
12. Industrial Inertial i.e. the presence of other industries also attracts more industries.

3. PLANT LAYOUT
This is the third decision to be made after plant location. It is the physical arrangement of
machines, people and other facilities within the factory in the most efficient manner. A
number of characteristics are desirable or a Good Plant Layout; among others
- Maximum flexibility
- Maximum co-ordination between various departments and processes
- Maximum use of volume / space
- Maximum accessibility
- Minimum distance
- Minimum handling
- Minimum discomfort
- Maximum safety
- Maximum security
- Efficient material flow

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FACTORS INFLUENCING PLANT LAYOUT

1. Type of production process, is the process through which goods are processed
Whether extractive, refining, converting or assembly processes.
2. Production Procedures or Sequence
a) Continuous
Mostly used where production is of standardised products produced for mass
consumption. Goods are produced at a constant steady rate. Equipment, employees
and machines are positioned in such a way as to maximise efficiency.
b) Batch / Intermitted Production
Goods are produced in small quantities or batches tailored to meet customer needs and
requirements. Equipment, employees and machines are arranged in such a way as to
maximise flexibility.
3. Quantity of Production
Large quantities of products require more machines. Besides large quantities may
require large stores for storing finished goods, raw materials and other components.
4. Quality of Production
High quality products may require special storage and handling facilities e.g. air
conditioned rooms, refrigerated vehicles.
5. Employee Safety
Layout should allow isolation of hazardous machines and materials from employees.
There should be proper ventilations and fire escape. There should be also be free
access to and from machines.

TYPES OF LAYOUT
1. Process Layout
This is a layout according to the needs of the process. It is appropriate for batch operations.
Here work centres or departments are grouped together according to their functional type.
General-purpose machines are used. High flexibility and skills are required. This kind of
layout is used by hospitals where demand is irregular.

2. Product Layout

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This is layout according to the need of the product.

It is appropriate for producing one standardised product, usually in large volume. Each unit of
output requires the same sequence of operations from beginning to end. Work centres and
equipment are ideally arranged in a line to afford a specialised sequence of tasks. Each work
centre performs one highly specialised part of the total product build up sequence. This kind
of layout is used by soft drinks industries etc.

3. Fixed Position Layout

Appropriate when because of size, shape of any other characteristics it is not feasible to move
the product. Here, the product stays in one location; tools equipment and workers are brought
to it as needed. There is a low volume because products are made to order. General purpose,
mobile equipment is used. Examples include shipbuilding, locomotives, agricultural
operations like ploughing, fertilising etc.

4. Combination Layout
More often than not, a process layout is combined with a product layout. E.g. refrigerator
manufacturers used a combination layout. First, they use process- Oriented layout to produce
various parts and sub-components e.g. welding and heating. For trail assembly of the product,
they use a product-oriented layout.

Please: Read about the advantages and disadvantages of each kind of layout.
Advantages of a good layout.
1. Reduction in costs - less spoilage and theft.
2. Improved time management due to reduction idle time.
3. Ease of supervision and production control.
4. Flexibility hence ease of expansion.
5. Improved production quality.
6. Increase in total output.

PRODUCTION PLANNING AND CONTROL

After deciding on product design, plant location and layout, the production manager’s next
task is to carryout production planning and control.

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Production Planning
Planning means determining a future course of action. Production planning is therefore
defined as determining the future levels of manufacturing operations within an organisation. It
involves setting plant and equipment capacities, setting possible production targets, deciding
on the size of labour force and setting the desired levels of inventory.

Objectives of Production Planning

1. To arrive at the actual manufacturing operations during the planned period
2. To control quality in an organisation
3. To co-ordinate labour and machines in the most efficient manner
4. To help take corrective action, if need be

Types of Production Plans

1. Short Term Production Plans (Operational Plans)

These usually last for a period of one year. They assist the production manager to
carry out the day today activities in the production department in line with the overall
organisational objectives. Examples of short-term production plans include activities
like routing, scheduling etc.

2. Medium Term Production Plans (Technical Plans)

These usually last for a period of 3-5 years. They help the production managers to plan
for the future and also form the basis for long term planning.

3. Long Term Production Plans (Strategic Plans).

These usually last for a period of 5 – 10 years. They help the production manager to
look into the future and to take on long-term profitable opportunities. This helps the
organisation to achieve its long-term goals. Examples of long term production plans
include replacement of machines, factory expansion etc.

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Production control involves comparing actual production levels with planned

production levels and taking corrective action, if need be.

ACTIVITIES INVOLVED IN PRODUCTION PLANNING AND CONTROL.

Production planning and control consists of various activities namely routing loading
and scheduling, materials handling and maintenance and quality control.

ROUTING

Is an aspect of planning by which the route or path over which work will flow is determined.
It involves determining where and by whom work shall be done and the necessary sequence

of operations. The objective of routing is to ensure that work goes to the best man in the

system and the cheapest but efficient and systematic sequence of operations is adopted.

LOADING
This is an aspect of production planning that deals with the effective utilization of machines.
The available workload to be performed and the available capacity of the machines should be
considered. The largest workload should go to the best machine in the system. While loading,
the situations should be avoided namely under loading and overloading of machines. Under
loading may result from poor planning or lack of demand. This may lead to machined
redundancy. Overloading results from too much work. This may lead to overworking of
machines, which may increase wear and tear, and hence gradual breakdown of machines. Too
much work may also call for overtime, which may lead to poor health of the workers.

SCHEDULING
This involves drawing up a timetable for completion of production activities. This facilitates
keeping track of materials, equipment and labour. The timetable for production ensures that
work goes uninterrupted throughout the production process. This increases production
efficiency. Scheduling involves determining when to start production activities, how long they
will take to be completed and the date/time of completion.

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Scheduling is done using techniques such as Charts and Graphics Critical Path Method
(CPM) Programmes Evaluation And Review Techniques (PERT).

MATERIALS HANDLING
This the way in which materials used in the production process are handled during
movements from one place to another i.e. from stores to machines for usage in production
processes and from the transporters to the stores.
This is an important area of concern for the production managers because material’s handling
costs amount to about one fifth of the total costs of production. Today, however, robots are
widely used to minimise breakages and other kinds of damages.

Basic Rules for materials handling.

1. Minimise handling: It is preferable to move workers rather than materials.
2. Plan Handling: Keep the distance between operations as short as possible.
3. Select correct handling equipment: Use simple, standard equipment for handling
materials.
4. Make the most effective use of handling equipment: Avoid machine overload and
under load.

PLANT MAINTENANCE
This is the task of keeping the factory building and equipment in a satisfactory condition
according to plant operations requirements and standards set by management.

Objectives/aims of Maintenance.
1. To enable product quality and customer satisfaction to be achieved through correctly
adjusted serviced and operated equipment.
2. To maximise the useful life of the equipment.
3. To keep equipment safe and prevent the development of safety hazards.
4. To minimise the total production costs directly attributable to equipment service and
repair.
5. To minimise the frequency and severity of interruptions to operating processes.

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6. To maximise production capacity from the given equipment resources.

Functions of the Maintenance (Works) sub - department

1. Plant instalment and mechanical maintenance
2. Electrical installation and regular maintenance.
3. Building addition and maintenance of existing structures.
4. Plant overhaul/changing worn-out parts.
5. Equipment spares and store keeping.
6. Plant record keeping.
7. Factory cleaning and ensuring of hygiene e.g. lawn mooring, mopping, sweeping etc.

Maintenance is very important especially in a continuous flow of production where

breakdown in one machine may lead to a stoppage in the whole production system.

In a modern maintenance firm, maintenance may be done by outside firms on a contract basis.

Methods of Plant Maintenance

i. Breakdown Maintenance.
Under this method the plant will be repaired when there has been actual breakdown.
This method leads to great losses in the organisation because of interruption of work
schedules and jobs are not completed on time. It may also lead to loss of customer orders.

The cost of replacement of an item as an individual (individual replacement) is usually greater

than that of replacing items as a group (group replacement).

ii. Preventive Maintenance

Here, equipment is prevented from breaking down to avoid losses associated with stoppages
in production. It involves preplanning of maintenance so that there is routine inspection of
machines, replacement of worn-out parts and regular oiling.

The production manager has to be able to trade off between preventive maintenance and
breakdown maintenance in order to minimise the costs of the operating system. Advances in

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technology have enabled the development of systems, which reduce the cost of maintenance
while improving operational performance. These are usually computer-based devices, which
enabled the detection of faults before severe difficulties, and even damages occur.

ASSIGNMENT: Identify the benefits and disadvantages of each method mentioned

above?

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