Lecture Notes: Understanding Business - Types of Production Processes

Introduction

• Production System Definition
  • Activities that combine and transform resources to add value.
  • Characteristics:
    • Organized activity with an objective.
    • Transforms inputs to outputs.
    • Interlinked with other organizational systems.
    • Feedback essential for control and improvement.

Types of Production Systems

1. Make to Stock (MTS)

   • Products completed and stocked before customer order.

2. Make to Order (MTO)

   • Production starts after receiving a customer order.

3. Assemble to Order (ATO)

   • Produces standard modules that are assembled per customer specifications.

Production Processes

• Continuous vs. Intermittent Production
  • Determined by product variety and volume.

Continuous Production System

• Flow Production System

  • Linear product flow, high-standardized production.
  • Examples: Chemical plants, oil refineries.

• Mass Production System

  • Repetitive manufacturing, large volumes, standardized products.
  • Examples: Car, television manufacturing.

Intermittent Production System

1. Job Shop Production Process

   • High variety, low volume, unique jobs.
   • Examples: Car mechanic shops, metal fabrication.

2. Batch Production Process

   • Products grouped into families, moderate flexibility.
   • Examples: Hand tools.

3. Project Production System

   • Fixed item production, all resources come to the site.
   • Examples: Shipbuilding, construction.

Characteristics and Advantages

• Continuous Production

  • High rate of production, low unit cost, high standardization.
  • Limitations: High initial investment, low flexibility, potential for complete halt if one machine fails.

• Intermittent Production

  • Flexibility, high-skilled labor, job satisfaction.
  • Limitations: Complex planning, higher work-in-progress inventory.

Comparison Factors:

• Manufacturing Cost

  • Continuous: Low variable, high fixed costs.

• Capital Investment

  • Continuous systems require a high plant investment.

• Size and Technical Requirements

  • Continuous systems require large plant sizes, while intermittent requires more storage space.

• Flexibility and Organizational Structure

  • More flexible in job shops; continuous systems are more hierarchical.

• Job Security

  • Higher in organized continuous production systems due to structured environments.

Conclusion

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These notes summarize the lecture on production processes, highlighting different systems, their characteristics, and applications. Focus on the variety, volume, and operational differences that define each system.