What is Production? , 4 types of production, Factors of production, production function

What is Production?

Production is a process of value addition, which is developed to transform a set of input elements like man, raw material, capital, energy, information into finished products and services in proper quality and quantity.

Significance of value addition in production can be transform row material into goods, assemble many small parts, or design a service. Production can be seen every day in factories, offices, hospitals, etc. Production can be agricultural, manufacturing, or service.

What is Production? , 4 types of production, Factors of production, production function

Factors of production: 

  1. Nature: Nature is a very important factor for any production. It is impossible to carry out production without land, water, and other resources. Suitable land and availability of water make the production easier.
  2. Labour: Human effort is a necessary factor for production. Skilled labor can make a significant difference in any production.
  3. Capital: Capital is needed for factory building, buying machinery, tools, raw materials, etc.
  4. Enterprise: Enterprise is the activity that organizes other factors like government regulation, working discipline, etc into an operating unit.

Production Function:

  • The production function is the expression of the number of variables like raw materials, their quantity, number of machinery, quantity of finished products, etc. Algebraically production function can be written as

                                . .                    where ‘y’ is the quantity of product Y and
                                                                                      which depends upon the quantities c1, c2…cN
                                                                                     of the input C1, C2, C3……Cn respectively.

  • A production function thus involves a wide range of activities from the plant location to the packing of products to be distributed by the marketing division of the organization. More experienced marketing division demand will more, thus production will be increased.
  • The modern evolution of the production function started with the industrial revolution in the western countries and North America. New machinery was developed which helps in starting new and big industries. 
  • various factors like labor charges, lack of skilled labor, etc led to automation. The first stage of evolution of automation is Detroit Automation, the second stage is feed back control, and the third stage is Computer technology.
  • The selection of plant location and plant layout is always difficult. The location of the plant should be in such a place where resources are easily available and low distribution costs. A good plant layout permits the material to move little and at minimum cost.
  • Production, planning, and control consider the determination and regulation of the production processes and functions like routing, scheduling, dispatching, etc.
  • Another important function is Research and Development. Research means a critical investigation to acquire new knowledge and applied it to explore facts and information for the practical problem.                 The development comes after applied research. Development involves the design and fabrication of new or modification of products and then testing them.

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