PRODUCTION MANAGEMENT(PM), OBJECTIVE OF PM, PRODUCTION FUNCTION, FACTOR OF PRODUCTION: LAND, LABOR, CAPITAL, ENTREPRENEUR, & THEIR CHARACTERISTICS

1. PRODUCTION
MANAGEMENT
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2. INTRODUCTION
 The very essence of any business is to cater
needs of customer by providing services and
goods, and in process create value for customers
and solve their problems. PRODUCTIONPRODUCTION
MANAGEMENTMANAGEMENT talks about management
concepts in creation of goods and services.
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3. DEFINITION OF PRODUCTION
MANAGEMENT
 Production management is the process, which
combines and transforms various resources used
in the production subsystem of the organization
into value added product/services in a controlled
manner as per the policies of the organization.
Therefore, it is that part of an organization,
which is concerned with the transformation of a
range of inputs into the required
(products/services) having the requisite quality
level.
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4.  The set of interrelated management activities,
which are involved in manufacturing certain
products, is called as production management.
 E.S. Buffa defines production management as,
“Production management deals with decision
making related to production processes so that
the resulting goods or services are produced
according to specifications, in the amount and by
the schedule demanded and out of minimum
cost.”
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5. OBJECTIVES OF PRODUCTION
MANAGEMENT
 The objective of the production management is
‘to produce goods services of right quality and
quantity at the right time and right manufacturing
cost’.
1. Right Quality
2. Right Quantity
3. Right Time
4. Right Manufacturing Cost
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6. DEFINITION OF PRODUCTION
 Production is defined as “the 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.” Thus production is
a value addition process. At each stage of processing,
there will be value addition.
 Edwood Buffa defines production as ‘a process by
which goods and services are created’.
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7. Inputs:Inputs:
• Men
• Materials
• Machines
• Information
• Capital
• Men
• Materials
• Machines
• Information
• Capital
Transformation Process:Transformation Process:
• Product Design
• Product Planning
• Production Control
• Maintenance
• Product Design
• Product Planning
• Production Control
• Maintenance
Outputs:Outputs:
• Product
• Services
• Product
• Services
Continuous:Continuous:
• Inventory
• Quality
• Cost
• Inventory
• Quality
• Cost
EnvironmentEnvironment Feedback InformationFeedback Information
Fig. 1.1 Schematic Production SystemFig. 1.1 Schematic Production System
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8. EXAMPLES OF PRODUCTION
 Some examples of production are: manufacturing
custom-made products like, boilers with a
specific capacity, constructing flats, some
structural fabrication works for selected
customers, etc., and manufacturing standardized
products like, car, bus, motor cycle, radio,
television, etc.
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9. PRODUCTION FUNCTION
 Factors of productionFactors of production means inputs and finished
goods means output. Input decides the quantity
of output i.e. output depends upon input. Input is
the starting point and output is the end point of
production process
 such input-output relationship is called as
"ProductionProduction FunctionFunction".
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11.  Production function relates physical output of a
production process to physical input or factors of
production.
 A production function is customarily assumed to
specify the maximum output from a given set of
inputs.
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12.  The production function is central to the
marginalist focus of neoclassical economics ,its
definition of efficiency as allocative efficiency ,
its analysis of how market price can govern the
achievement of allocative efficiency in a
economy , and an analysis of the distribution of
income , which attributes factor income to the
marginal product of factor inputs.
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13.  A production function can be expressed in a
functional form as ,
 Q = f (X 1 , X2 ,X3……Xn)
 Where Q is quantity of output and X1 ,X2…..Xn
are quantities of factor inputs.
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14. FACTORS OF PRODUCTION
 Factors of production: the inputs used to
produce goods and services.
 Factors of production are
 Land
 Labour
 Capital
 Entrepreneur
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15. FACTORS OF
PRODUCTION
All factors of production
like Land, Labour,
Capital, Entrepreneur
are required altogether
at a time to produce a
COMMODITY.COMMODITY.
According to Prof.
Benham, "Anything that
contributes towards
output is a factor of
production."
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16. FOUR FACTORS OF
PRODUCTION IN ECONOMICS
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17. FACTORS OF PRODUCTION-
LANDLAND
 Land is a Natural & Primary Factor of
Production.
 Land is not created by mankind but it is a gift
of nature. So, it is called as natural factor of
production. It is also called as original or
primary factor of production. Normally, land
means surface of earth.
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18. CHARACTERISTICS OF LAND18

19. FACTORS OF PRODUCTION-
LABORLABOR
 Labour is an ability to work.
 Labour is a broad concept because it includes
both physical and mental labour (as per above
picture). Labour is a primary or human factor of
production. It indicates human resource.
 Labourer is a person who owns labour. So
labourer means worker. It is a person engaged in
some work.
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20. CHARACTERISTICS OF
LABOUR
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21. FACTORS OF PRODUCTION-
CAPITALCAPITAL
 Normally, capital means investment of money in
business. But in economics money becomes
capital only when it is used to purchase real
capital goods like plant, machinery, etc. When
money is used to purchase capital goods, it
becomes Money Capital.
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22. CHARACTERISTICS OF
CAPITAL
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23. FACTORS OF PRODUCTION-
ENTREPREENUR
 Factors of production viz. land, labour and
capital are scattered at different places. All
these factors have to be assembled together.
This work is done by enterprise through
entrepreneur. This is an 'Organization
Function'. Organization function is the work
of bringing the required factors together and
making them work harmoniously.
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24. QUALITIES / SKILLS
OF AN ENTREPREENUR
 To be a successful and ideal entrepreneur, one should have
certain qualities orskills as given below :-
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25. THANK YOU
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