Production Management

Production is the use of people and machines to convert materials into finished products and supply these products to customers. Production includes three key stages: product development, purchasing, and manufacturing.

The development of a new product involves six steps: idea generation, screening, business analysis, product development, test marketing, and commercialization. Roughly, one in 58 new product ideas becomes a commercial success.

When the product development department designs a new product, a make-buy decision determines which components will be bought from outside suppliers and which will be made by the firm itself.

The six steps in purchasing raw materials and semi-finished and finished parts are 1) recognizing what is needed, 2) developing specifications, 3) requesting bids and selecting a vendor, 4) following up with the vendor, 5) receiving the order, and 6) evaluating the vendor.

Mass production and automation have revolutionized manufacturing methods and have made higher quality, standardized products available at lower prices.

The three classifications of manufacturing operations are standard versus custom manufacture, continuous versus batch process, and analytic versus synthetic process.

Once final products are assembled, the transportation section must ship them to customers on time and in good condition. The managers here use one of the five modes of transportation: highway, rail, air, water, and pipeline. Developments such as piggyback service and containerization allow a business to use two or more transportation modes to move shipment over long distances.

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