1. System Approach of
Production Function

2. System Approach of Production Function
 A system is the combination of subsystems.
 Every system is the sub system of larger system.
If we consider a global economic system, a national
economy are sub systems.
If we consider a national economy is a
system, different industries are sub systems.
When a industry is a system different organization or
firms are sub system
An organization is a combination of different
components (Departments) working together to achieve
specific goal(s).
It is a set of different sub-systems ( departments). So it
is called a system.
Among the different Departments, production
management is one of the them.

3. Contd……….
 An Organizational Structure as a
system
The Operation Department is considered as POM

4. Contd……….
When considering POM itself POM is system
of different sub systems.
The components or sub systems are
input, process, output, feedback and random
fluctuations.
 Strong interaction makes the production
function supportive to meet organizational
goal(s).
The components of system always inter
related and having interaction each other to
achieve the same (organizational) goal(s).

5. The Economic System Transforms
Inputs to Outputs
Random Fluctuations (
Disturbances)
Input Process Outputs
s
Materials, Land Goods and
, Labor, Capital Services
, Management,
Time
Conversion Process
Feedback loop

6. Inputs:
 Inputs are the basic needs or resources of the
production system.
 Inputs may be
land, building, labour, capital, management, raw
material and WIP.
 The quality and nature of input determine the
quality of output.
 Land and building should be located at the
facilite area of customers.
 Capital should be having low cost (i.e. low cost
of capital)
 Raw material should have quality and low cost.
 Labour or human resource is an important input
for production and operation management

7. Process:
 It is the conversion process of inputs to outputs.
 It includes
machine, equipments, technology, and
processing steps.
 Major function of the process is creating
utility(ies) in inputs (raw materials) and add
economic values.
 The pace of technology differs in conversion
process.
 It creates noise, light, wastage, which are not
environment friendly.
 In the age of consumerism the management
should choose environment friendly conversion
process.
 Selection of appropriate, efficient and

8. Outputs:
 Output Is the desired result of the
(production) system.
 It will tangible or intangible in nature.
 Production organization- tangible (car, cloths
ect.)
 Service organization- intangible ( bank
services, hair services)
 Some time outputs may be quasi in nature
(mixed)- restaurant
 The output should be of desired utility in
terms of quality, cost and delivery or of
stakeholder’s interest
(customer, shareholders)

9. Random Fluctuations or
disturbances:
It is the unplanned or uncontrolled
environmental influences in the conversion
process that causes planned and actual
output differ.
It may be categorized as:
 Internal Factors- Human
Resources, Breakdown of machines, supply
of raw materials ( controllable but unplanned)
External Factors- Electricity
supply, flood, earthquake, government
policies. ( Uncontrollable and unplanned)

10. Feedback:
Feed back is the control mechanism of the
production function which support
management whether organizational
activities need adjustment??
It has three phases:
 Set the goal
 Determine the actual result
 Comparison with the plane or actual result- (
+, - or = )
 + or - result: need adjustment

11. Conclusion:
 POM system is the part of organization that produces
the organizational physical product or services.
 Inputs are the basic need of production functions.
 Conversion process is the process of creation of
unility(ies) and economic value added to the inputs.
 Output is the desired physical product or services
which fulfill the desired of the customer as well as
stakeholders.
 Random Fluctuations are the unplanned or
uncontrolled environmental influences which
influence the production process.
 Feedback is the control mechanism of the production
function.
“Production Function is the system of conversion of
inputs into outputs with addition of economic values
and utility(ies).”

12. Any Please