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Unit 1: Introduction to Operations Management
1.2 Production Functions Notes
Production may be defined as the conversion of inputs – men, machines, materials, money,
methods and management (6 Ms) into output through a transformation process. Output may be
goods produced or services rendered.
"Goods produced" is for the manufacturing concerns and "services rendered" is for the service
operation units such as banks, hospitals, hotels/restaurants, etc. In this sense, production
management may be viewed as operations management.
Figure 1.1: Production as a System
INPUTS OUTPUT
Men
Goods
Machines Produced
PROCESS
Materials or
Transformation Process Services
Money
Rendered
Methods
MGT
Control/Feedback
Production is a primary business function along with marketing and finance, other management
areas being HRD (Personnel & Industrial Relations) and Materials Management, etc. Marketing
establishes the demand for goods and services, finance provides the capital and equipment
while production actually makes the goods or services. In this sense, it plays a vital role in
achieving a firm's strategic plans or goals.
Figure 1.2: Production as Coordination Function
FINANCE
HRM
PRODUCTION
MARKETING
Further, as the production function produces the goods and services, it typically involves the
greatest bulk of the companies' employees and is responsible for a large portion of the firm's
assets.
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