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Factors of ProductionWhat is ProductionProduction is an outcome of an economic activity.

Prof. J.R.Hicks defines Production as "any activity directed towards the satisfaction of other peoples wants through exchange."

What is Factors of Production 1) Anything that assist production is termed as factor of production.

2) But mere existence is not necessarily a factor of production. 3) It become a factor of production only when it actually assist or contributes to production.

Basic Factors of Production1) LAND 2) LABOUR

3) CAPITAL 4)ENTREPRENUER

Land1) Land is the original and primary factor of production.

2) Without land the production process cannot exceed further.

3) In Economics all the natural resources that are available a) on the surface of the earth b) below the surface of the earth c) above the surface of the earth and which are used in the production process is called LAND.

1) Land is a free gift of nature.2) Land has no cost of production.3) The supply of land perfectly inelastic.4) Land is subject to Law of Diminishing Return.5) Land is immobile.

1) Labour is a human factor of production.

2) In economics labour is defined as- Economic activity of man with HEAD and HAND.

3) LABOUR is human factor of any kind, manual or mental,skilled or unskilled, scientific or artistic undertaken with a view of creating or adding utility. LABOUR Features of Labour1) Labour is a human factor.

2) Active factor.

3) Labour cannot be stored.

4) No two labours are identical.

1) Capital is a man-made resource of production used to produce further wealth.2) It refers to the stock of capital assets such as factories,machines, tools & equipments, raw material, transport vehicles etc3) Therefore capital is defined as Produced means of production

1) Capital is man-made factor of production. 2) Supply of capital is elastic.

3) Capital has mobility. 4) All capital is wealth but all wealth is not capital.Features of Capital

1) Entreprenuer is a person who brings in land, labour & capital in one place & uses it for the production process. 2) He is the person who decides- a) What to produce? b) How to produce? c) Where to produce? 3) The person who takes these decisions along with the risk associated with them is known as Entreprenuer.

Entreprenuer

1) He must be a good administrator.2) He must possess complete knowledge.3) He must be a person of imagination.4) He must be a man of action. Features of Entreprenuer

Production MethodsJob production: Producing a one-off item specially designed for the customer.

Batch production: Producing a limited number of identical products - each item in the batch passes through one stage of production before passing onto the next stage.

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Production MethodsFlow production: Producing items in a continually moving process - also known as line production.

Cell production: Splitting flow production into self-contained groups that are responsible for whole work unitsJOB PRODUCTIONJob production is normally used for the production of single one-off products. The products may be small or large and are often unique. In order to be called job production,each individual product has to be completed before the next product is started. At any one time, there is only one product being made. Job production enables specialised products to be produced and tends to be motivating for workers because they produce the whole product and take pride in it.However, this production method tends to result in high unit costs, often takes a long time to complete, and is usually labour intensive. The labour force also needs to be highly skilled and this is not always easy to achieve.

Example of Job ProductionAston Martin is an example of a very expensive car that is individually produced for the needs of each customer. Each engine is hand built and carries a plate with the engineers name on it.Batch ProductionBatch production makes products inseparategroups and the products in each batch go through the whole process together. The production process involves a number of distinct stages and the defining feature of batch production is thatevery unit in the batch must go through an individual production stage before the batch as a whole moves on to the next stage.Batch ProductionBatch production allows firms to use division of labour in the production process and it enables economies of scale if the batch is large enough. It is usually employed in industries where demand is for batches of identical products (hot dogs, bread, buns, doughnuts). Batch It also allows each individual batch to be specifically matched to the demand, and the design and composition of batches can easily be altered ( chocolate, bubblegums, doughnuts).

The drawbacks are that batch production tends to have high levels of work-in-progress stocks at each stage of the productionprocess The work may well be boring and demotivating for workers. If batches are small, then unit costs are likely to remain high. There is often a need to clean and adjust machinery after each batch has passed through.

Flow/Mass ProductionThis method is used whenindividual products move from stage to stage of the production process as soon as they are ready, without having to wait for any other products. Flow production systems are capable of producing large quantities of output in a relatively short time and so it suits industries where demand for a product is high and consistentFlow ProductionIt also suits the production of large numbers of a standardised item that only requires minimal alterations. This is often why it is often referred to as mass production. Flow production usually takes place on a production line - hence the use of the term production line.Flow production Labour costs tend to be relatively low, because much of the process is mechanised and there is little physical handling of products. The constant output should make the planning of inputs relatively simple and this can lead to the minimisation of input stocks through the use of just-in-time (JIT) stock controlFlow ProductionQuality tends to beconsistentand high and it is easy to check thequalityof products at various pointsthroughoutthe process. The main disadvantage is the high initial set-up cost. By definition, capital intensive, high technology production lines are going to cost a great deal of money. In addition, the work involved tends to be boring, demotivating and repetitive.Cell ProductionCell production is a form of flow production, but instead of each worker performing a single task,the production line is split into several self-contained, mini-production units - known as cells. Each individual cell produces a complete unit of work, such as a complete washing machine motor and not just a small part of it.Cell Production Each cell has a team leader and below that a single level ofhierarchymade up of multi-skilled workers. The performance of each cell is measured against pre-set targets (output levels, quality and lead times, etc).

Cells are responsible for the quality of their own complete units of work (total quality management-Cell ProductionThe cell production method has led to:

increased worker commitment and motivationjob rotation within the cellincreased productivity

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Choosing appropriate production methodsHL

Quantitative FactorsQualitative FactorsSite CostsInfrastructuretransportcommunication linksRegional incentivesshort term grantsrent free accommodationEnvironmental and planning issuespoor public relationspressure groupsTransport costsmanufacturing businesses need to consider transport of raw materials, components and finished goodsservice needs to be close to marketManagement preferencesto set up in an area with good quality of lifee.g. schools, shopping areasLabour costsquality & productivity of labour needs to be consideredClusteringsame businesses locating in one areabenefit of proximity to existing and potential customers & suppliers, supply of labourRevenue generationlocation increases sales due to prestige of area/market proximity