Daily Archives: November 1st, 2012

Concept of Production

Production function is “the part of organization which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level.”

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’.

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.

Production is an organized activity of transforming raw materials into finished products. It is an intentional act of producing something useful. In production systems we have different resources as input.

The inputs are processed in a series of operations. The sequence, number, and type of operations (mechanical, chemical, electrical, assembly, inspection, transportation, etc) are specified for each input. The output of the system will be complete parts products, chemicals etc. Production function shows the relationship between the input and the output of an organization. By the study of production function the maximum output which can be achieved with given inputs, or say resources with a given state of technology is determined.

The production function can be represented by the simple mathematical equation which relates the outputs as the function of inputs, that is

Y = f (X1, X2,…,Xn)


Y = units of output, which is the function of the quantity of two or more inputs

X1 = unit of labor, and

X2 = unit of machinery, and so on.

Based on above equation we can define production function as the functional relationship between inputs and output.