The Hong Kong Management Association-

Hong Kong Polytechnic Joint Diploma

HK
MA in Management Studies

P-31 (9/15)

MODULE: Introduction to Management

LECTURE: Production Function

CLASSIFICATION OF PRODUCTION SYSTEMS

Three types of production ·system' were identified in an attempt to
classify the actual operations of a manufacturing company:
(1) Small batch and unit production.
(2) Large batch and mass production.
(3) Process production.
These were compared in their effect on:
(1) The span of control of the first line supervisor.
(2) The number of levels of authority in the management hierarchy.
Results showed that companies using process production had most
levels of authority (6) and the smallest span of control of the first
line supervisor (15 subordinates); this may reflect the high
technology of these systems and the relatively small labour force
required to run them. The span of control was greatest in mass
production firms (the.median firm supervisor had 45 subordinates);
unit production firms had a median of about 25 subordinates. Mass
production firms also tended to have more levels of authority (4)
than unit production firms (3).
There is little point in classification for its own sake, certain
characteristics of production systems do have a considerable impact
on the type of operations problems encountered and on the freedom of
action of the operations manager. It is therefore useful to attempt
a classification based on c9aracteristics which directly affect the
operations system. This means that both the internal manufacturing
system and the external market environment must be examined.
Companies usually will not fall neatly into specific categories. It
is important too, to look at the problems arising from the mixing of
widely different systems.
We define three basic characteristics of an operations system:
(1) The nature of the product structure.
(2) The organisation of the physical flow system.
(3) The nature of customer orders.
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These are examined below.

(1) The Nature of the Product Structure
It is first necessary to divide the company's products into
those the customer regards as single items and those he regards
as multi component assemblies. The great bulk of production in
the engineering, electronics, furniture and similar industries
is concerned with assemblies of components which are either
manufactured within the company or purchased from outside.
This is important because the production system is often
splitted, with the physical system required to produce
components being separate from that used for product assembly.
(2) Organisation of the Physical Flow System
Three basic organisational structures are: line, functional and
group. Component manufacture and assembly are often organised
in different ways, the most common combination being:
Functional organisation Under functional organisation, the
production facilities are grouped together by function or type;
for example, in a furniture factory all the drilling machines
would be grouped together in one area, all the sanding and
finishing machines in another. Production orders are routed
through the functional department required to perform each
operation and the order passes from department to department.
The main advantage of such an organisation is its extreme
flexibility; it can produce a very wide range of products.
Line Organisation Manual assembly lines are commonly used for
product assembly. Line organisation, however, also includes
'transfer machines' (transfer lines) for the production.of
components and continuous process plant. The essential
characteristics of line organisation are:
(1) That the material flow system through the manufacturing
facilities is unidirectional, and
(2) That any product flowing along the line usually requires
all the facilities on the line.
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Group Organisation Group organisation is somewhat similar to

line organisation except that:

(1) A particular group or cell of facilities processes a range

of items with similar facility requirements. All the
items will not usually need all the facilities. Although
processed by same cell, the items themselves may not be
physically very similar.

(2) Different facilities within the group will usually be

working different items. This is not possible on a
non-manual transfer line.

(3) Some degree of resetting (as little as possible) may be

required each time a new item or batch of items arrives at
a facility in the group

(3) The Nature of customer Orders

The market variable which has most effect on the operation of

the production system is the degree to which the link between
manufacturer and customer is direct or indirect.

(a) Make to customer Order If it is possible at some stage of

production to identify a particular work-in-process order
as being exclusively for a particular customer, then the
company operates in a make-to-order market. The degree to
which manufacture may proceed prior to receipt of a
customer order depends mainly on whether the customer
controls design of the order. Possible systems include:

1. JOBBING PRODUCTION.

2. CONTRACT WORK.

3. REPEAT ORDER OF BATCH PRODUCTION.

4. CALL-OFF SCHEDULES.

(b) Make for Stock A make for stock company offers off-the
shelf' service to its customers for a range of standard
products. The customer is often not the final consumer;
for instance, in food manufacture, the manufacturing
organisation has little, if any, contact with the eventual
customers. The production system is geared to the
replenishment of finished goods stocks on the basis of a
forward plan with consequent modifications in the light of
market demand.