Production Function and Logistics: Optimizing Manufacturing Processes
Item 7: Production Function and Company Costs
1. Production Department
Production Function: All activities that produce a good or provide a service using raw materials, machinery, facilities, and manpower.
Features of the Production Department:
- Manufacturing the product
- Provisioning (providing materials, selecting suppliers)
- Storage
- Quality Assurance
2. Production
Product: A good or service produced with a combination of production factors: raw materials, labor (manpower), machinery, facilities, and capital. Value-added processes create a useful gain.
Producing Sectors: Primary, secondary, tertiary.
2.1 Technology
Technology is the method of combining production factors to create a product. Each product has a specific technology, and the same product can be made with different technologies. Companies invest in improving production technologies through R&D (Research + Development + Innovation).
3. Production Function
Variables:
- L: Labor (workers)
- F: Productivity and Performance
- K: Capital (machinery)
- Q: Production (quantity of product)
Performance and Productivity: The relationship between the quality and quantity of produced factors and the production factors used.
Formula: Quantity produced / Amount of production factors used
Labour Productivity:
Formula: Production / Number of workers (FL = Q / L)
Capital Productivity:
Formula: Production / Number of machines (FK = Q / K)
Total Productivity:
Formula: Value of production (Euro gained from sales) / Cost of production (Euro spent on labor and machinery) (FT = QT / CT)
T8: Production Management
1. Production Function: Objectives and Elements
Combining factors of production (working capital) specifies a technology for a product or service.
The role of Production Management:
- Handling objectives
- Planning the entire process
- Controlling the results
Key Elements:
- Sufficient production capacity
- Adequate product demand
- Favorable economic environment
2. Production Planning
Production management operates under specific criteria:
- Efficiency: Working hard
- Effectiveness: Achieving good results quickly
Planning structures the production process into stages developed for the product, ensuring sufficient quality, minimal cost, and adherence to the initial schedule.
3. MRP (Material Requirements Planning)
MRP determines the needs and availability of raw materials for production. It requires knowing:
- Production program (what and when to produce)
- List of materials needed
- Material availability (in store, from suppliers)
- Lead time
4. Methods and Techniques for Planning
Systems program and monitor the production process over time, especially when complex activities must run in a specific order. Two common methods are:
- PERT-CPM (graph)
- Gantt Charts (visual)
PERT-CPM Method:
Outlines project activities and situations, defining:
- Early Time (E): Minimum time to reach a situation
- Last Time (L): Maximum time to reach a situation
- Total Time: L – E
Critical Path: Situations where Early Time equals Last Time, indicating activities that cannot be delayed without delaying the entire project. These require close monitoring.
5. Logistics
Logistics is a comprehensive system that manages production to maintain market competitiveness. It involves:
- Managing, planning, and controlling
- Sourcing materials
- Storage
- Transportation and distribution
- Quality control
6. Quality
Quality is the set of features and technical specifications that define a product. Improving the production process enhances quality through:
- Raw materials
- Machinery
- Facilities