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Production Analysis

Production Analysis. Decisions to be made by the production manager- How much to produce? How to allocate the necessary resources & in what proportion to gain efficient output levels This needs – engg/techl data on production possibilities(prdn fun) & economic data on Input-Output prices.

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Production Analysis

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  1. Production Analysis • Decisions to be made by the production manager- • How much to produce? • How to allocate the necessary resources & in what proportion to gain efficient output levels • This needs – engg/techl data on production possibilities(prdn fun) & economic data on Input-Output prices

  2. Meaning Prod refers to all activities involved in producing Goods & services right from borrowing to setting up/expanding production facilities to hiring workers, purchasing raw materials, running quality control, cost acctg rather than only transformation of Input to Output. It is a process of addition of utilitiesto the existing matter by changing form,time,place, Personnel.

  3. Production function Is an equation ,table ,graph showing maximum output That can be produced per time period with each set of inputs,technology assumed to be constant. Q= f(N,L,K,T,M) Objective – To find the level of technical & economic efficiency.

  4. Law of Returns-variable proportions Mel’s Resturant- 1 gas range, 1 deep fryer, 1 soft drink dispenser -for chips, vada & soft drink

  5. Least Cost Combination of Inputs • Alternative Combination Inputs Total cost • A 4 17 L= Rs 10 K = Rs 5 • B 5 12 • C 6 8 • D 7 5 • E 8 4

  6. Law of Returns to Scale The proportionate change in Output due to proportionate change in Inputs Increasing Returns - % change in I > % change in O Constant Returns - % change in I = % change in O Decreasing Returns - % change in I < % change in O

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