What is Production? (15.1)
- Thiago Casarin Lucenti
- Mar 11
- 1 min read
Chapter 15 - Production of Goods and Services
Lesson Objective: To understand the difference between production and productivity
Throughout the next couple of blog posts we will discuss operations management, more specifically, production:
The question remains:
What is production?
Production is the process of converting inputs (what is inputs?) such as land, labour, and capital into sealable outputs/goods (e.g. shoes).
There is one department of business that is responsible for this whole process and it's called Operations Management:
Operations Management is in charge of using resources the most effective way possible. What does that mean?
It is all about using the least amount of resources (inputs) to produce the largest amount of output yet meeting the expected quality to cover customers' demands.
Operations Management targets increased productivity. And remember, production # productivity:
Productivity, therefore, is a measure of the efficiency of which inputs (labor and capital) are used in the production process.
The more productivity a business has the lower its unit production costs will be!
Increasing output with the same amount of workers = lower costs!
How can we increase labor productivity then?
Improving the skill level of workers;
Improving the motivation of workers;
Introducing more automation and/or better technology;
Improving the quality of management decisions.
Why do you think larger businesses find it easier to achieve improvements in productivity than smaller businesses?
To-Do List:
Chapter 15 - Production of Goods and Services
Woohoo