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Understanding system concept is important for understanding the process of operations management. A system can be defined as purposeful collection of men, objects and processes for operating within a particular environment, It includes two aspects – management and systems. Management essentially is a social process involving coordination of human and material resources through the functions of forecasting, planning organizing and staffing, directing and controlling in order to accomplish the objectives of an organization in an effective manner. Effectiveness relates to achievements of right objectives by following the right methods. Efficiency relates to achievement of the objectives by using minimum amount of resources. For reaching any place one first decides the direction in which one should proceed and then runs very fast to reach the place as early as possible.

A production system has the following five parts :-

  1. Inputs
  2. Conversion Process
  3. Outputs
  4. Feedback
  5. Operating environment;

A simple production system is ‘explained in Fig. 1.1

The above basic process converts the inputs into outputs. Inputs are resources, which can be divided into

  1. Human resources
  2. Material resources
  3. Time resources.

In should be understood that all types of intangible resources whether it is the management process, energy, knowledge, techniques etc can be included in either the human or material resources. Output goods and services are obviously those, which are desired, and meet the specification laid down. Operating environment in which the resources are converted into desirable results is of utmost importance. Environment provides different quality of manpower and other resources for ease of understanding. Let us take the example of Maruti Udyog limited (MUL) production facilities established at Gurgaon. The type of
workforce available and their work ethics as also the advantage of Delhi next door are the unique environment benefits as compared to locations in other parts of the country.

Inputs to the operating system shown above are not only Land, Labour and Capital but also patients in a hospital, vehicles in a repair workshop, customers in a bank, customers of road and railways, guests in a hotel and so on. All the inputs go through the conversion process and output may be in the form of finished or semi finished goods, goods transported by the train/trucks, messages delivered by a courier company or patients treated by a hospital or a repaired vehicle.

Another feature of the production system is the productivity of the conversion process. Productivity of the efficiency of conversion process can be found out by the ratio of output to input




It is clear from the above definition of productivity that it can be improved.

  1. By increasing the output of specific and sirable standards with the same inputs.
  2. By decreasing the level of inputs for same outputs.
  3. By increasing outputs and decreasing inputs to change the productivity ratio favourably.

The difference between the production and productivity must be understood. Where as production is a process, productivity is a ratio as explained above. An essential part of any production system is the ‘waste’ or ‘scrap’ generated in the conversion process. The material may not be actually being processed (for example the iron piece not loaded in the lathe and the tool of the lathe machine not cutting it), it may only be waiting in store or at the workstation as either the machine or man is not available. Similarly, the vehicles may be waiting in a workshop because the numbers of repair facilities are not adequate. In efficient production systems, this waste has to be reduced to increase the productivity of the system.

If the outputs are not what is wanted, the system must be corrected through the process of feedback. Outputs must be monitored, a comparison between the actual outputs and desired outputs made and the difference fed to the conversion process for necessary correction. This is the feedback and is an important part of the production system

A conceptual model of a production/operation system is shown in Fig 1.2