Types of Production Systems in Operations Managment

A pro­duc­tion sys­tem is the method an organ­i­sa­tion uses to con­vert inputs into goods or ser­vices. It describes how work is done, how much is pro­duced, whether the prod­uct is cus­tomised or stan­dard, and whether pro­duc­tion runs con­tin­u­ously or in small, sep­a­rate quan­ti­ties.

Choos­ing the right sys­tem is one of the most impor­tant deci­sions in oper­a­tions man­age­ment. It fixes the kind of machines to buy, the skills work­ers need, the lay­out of the facil­ity, how inven­tory is held and, in the end, the cost per unit and the flex­i­bil­ity the busi­ness can offer its cus­tomers. A mis­match between the sys­tem and the mar­ket, such as mak­ing a stan­dard prod­uct by hand or a highly cus­tomised prod­uct on a rigid assem­bly line, wastes money for years.

Mean­ing and fea­tures of a pro­duc­tion sys­tem

Every pro­duc­tion sys­tem has the same basic parts: inputs (mate­ri­als, labour, machines, cap­i­tal, infor­ma­tion), a con­ver­sion process, out­puts (prod­ucts or ser­vices) and a feed­back mech­a­nism for con­trol. What dif­fers from one sys­tem to another is the pat­tern of the con­ver­sion process. A pro­duc­tion sys­tem there­fore explains:

• how work is done;
• how much is pro­duced;
• whether the prod­uct is cus­tomised or stan­dard;
• whether pro­duc­tion is con­tin­u­ous or in small quan­ti­ties.

Two fac­tors decide which pat­tern fits best:

• Vol­ume: how many units of each prod­uct are made.
• Vari­ety: how many dif­fer­ent prod­ucts, or how much cus­tomi­sa­tion, the oper­a­tion must han­dle.

As vol­ume rises, vari­ety usu­ally falls. This inverse rela­tion­ship is the key to under­stand­ing every type described below.

Clas­si­fi­ca­tion of pro­duc­tion sys­tems

Pro­duc­tion sys­tems are broadly divided into two groups:

• Inter­mit­tent sys­tems, where the flow of work is stop-start because prod­ucts dif­fer and machines must be reset. Job and batch pro­duc­tion fall here.
• Con­tin­u­ous (repet­i­tive) sys­tems, where items flow through a fixed sequence of oper­a­tions with lit­tle or no inter­rup­tion. Mass and con­tin­u­ous (process) pro­duc­tion fall here.

Many text­books also list project pro­duc­tion sep­a­rately, for very large one-off out­puts such as a dam or a ship. It is best seen as an extreme form of job pro­duc­tion. The four basic types, in order of increas­ing vol­ume, are job, batch, mass and con­tin­u­ous pro­duc­tion.

The main types of pro­duc­tion sys­tems

1. Job pro­duc­tion

In job pro­duc­tion, one prod­uct (or a very small num­ber) is made at a time accord­ing to a cus­tomer's spe­cific require­ments. Each order is treated as a sep­a­rate job and may never be repeated exactly.

Fea­tures

• high cus­tomi­sa­tion and very high vari­ety;
• small quan­tity, often a sin­gle unit;
• skilled, ver­sa­tile labour required;
• gen­eral-pur­pose machines and tools;
• more time per unit and higher cost per unit;
• work usu­ally starts only after an order is received.

Advan­tages: meets exact cus­tomer needs; high flex­i­bil­ity; low invest­ment in spe­cialised equip­ment; sat­is­fy­ing work for skilled staff.

Dis­ad­van­tages: high cost per unit; slow out­put; sched­ul­ing and cost esti­ma­tion are dif­fi­cult; heavy depen­dence on skilled work­ers.

Exam­ples: cus­tom fur­ni­ture, a wed­ding dress, house con­struc­tion, tool rooms, print­ing of a spe­cial order.

Sim­ple idea: each job is dif­fer­ent.

2. Batch pro­duc­tion

In batch pro­duc­tion, prod­ucts are made in groups or batches. The whole batch moves from one oper­a­tion to the next, and after one batch is fin­ished the machines are set up for a dif­fer­ent prod­uct.

Fea­tures

• mod­er­ate quan­tity and mod­er­ate vari­ety;
• the same prod­uct is made in lots, and the lot may be repeated later;
• a flex­i­ble sys­tem using gen­eral-pur­pose machines;
• machines are adjusted (set up) between batches;
• work-in-progress builds up between oper­a­tions.

Advan­tages: bet­ter use of machines than job pro­duc­tion; lower cost per unit than job pro­duc­tion; can offer a range of prod­ucts; spreads set-up cost over many units.

Dis­ad­van­tages: set-up time and cost for each change; wait­ing and han­dling between stages; higher inven­tory; more com­plex pro­duc­tion plan­ning.

Exam­ples: bak­ery items, med­i­cines, gar­ments, note­books, paints.

Sim­ple idea: make 100 units, stop, change over, then make another batch.

3. Mass pro­duc­tion

In mass pro­duc­tion, a large num­ber of stan­dard­ised prod­ucts is made on a pro­duc­tion or assem­bly line. Machines are arranged in the sequence of oper­a­tions (a prod­uct lay­out) and the work moves steadily from one sta­tion to the next.

Fea­tures

• large vol­ume and low vari­ety;
• repet­i­tive process with a fixed sequence;
• spe­cialised, often ded­i­cated machines;
• divi­sion of labour; work­ers may need less indi­vid­ual skill;
• low cost per unit because fixed costs are spread over many units;
• pro­duc­tion is usu­ally made to stock against a fore­cast.

Advan­tages: very low cost per unit; uni­form qual­ity; sim­ple con­trol once the line is bal­anced; less work-in-progress than batch pro­duc­tion.

Dis­ad­van­tages: high ini­tial invest­ment; lit­tle flex­i­bil­ity to change the prod­uct; a break­down at one sta­tion can stop the whole line; repet­i­tive work can be monot­o­nous.

Exam­ples: cars, bot­tled water, fans, mobile charg­ers, two-wheel­ers.

Sim­ple idea: the same prod­uct is pro­duced again and again.

4. Con­tin­u­ous pro­duc­tion

In con­tin­u­ous (or process) pro­duc­tion, pro­duc­tion hap­pens with­out inter­rup­tion, often 24 hours a day, for long peri­ods. The mate­r­ial flows through a series of highly auto­mated stages, and the out­put is usu­ally a homo­ge­neous prod­uct mea­sured in tonnes, litres or kilo­watt-hours rather than in sep­a­rate units.

Fea­tures

• very high vol­ume and very low vari­ety;
• highly stan­dard­ised prod­uct;
• auto­mated process with pipes, con­vey­ors and con­trol rooms;
• very high ini­tial invest­ment;
• runs con­tin­u­ously; shut­ting down and restart­ing is costly;
• lit­tle direct labour, but highly skilled main­te­nance staff.

Advan­tages: low­est cost per unit; con­sis­tent qual­ity; min­i­mal han­dling; very high out­put.

Dis­ad­van­tages: almost no flex­i­bil­ity; huge cap­i­tal require­ment; a stop­page is very expen­sive; demand must stay high and sta­ble.

Exam­ples: oil refin­ery, cement, steel, chem­i­cals, elec­tric­ity gen­er­a­tion.

Sim­ple idea: pro­duc­tion keeps flow­ing all the time.

Com­par­i­son of the four sys­tems

A use­ful way to remem­ber the order is Job, Batch, Mass, Con­tin­u­ous. As you move along this sequence:

• quan­tity increases;
• vari­ety decreases;
• stan­dard­i­s­a­tion increases;
• automa­tion and invest­ment increase;
• flex­i­bil­ity decreases and cost per unit falls.

Job pro­duc­tion ver­sus mass pro­duc­tion

This com­par­i­son is a com­mon exam ques­tion.

Worked exam­ple: choos­ing a sys­tem by vol­ume

The link between vol­ume and sys­tem can be shown with a sim­ple break-even cal­cu­la­tion. Sup­pose a fur­ni­ture maker can pro­duce a chair in two ways:

• Job-type work­shop: annual fixed cost ₹50,000, vari­able cost ₹300 per chair.
• Mass-type line: annual fixed cost ₹4,00,000, vari­able cost ₹100 per chair.

Step 1: write total cost for each. If $Q$ is the num­ber of chairs per year:

$$TC_{\text{job}} = 50{,}000 + 300Q \qquad TC_{\text{mass}} = 4{,}00{,}000 + 100Q$$

Step 2: set them equal to find the break-even vol­ume.

$$50{,}000 + 300Q = 4{,}00{,}000 + 100Q$$

$$200Q = 3{,}50{,}000 \quad\Rightarrow\quad Q = 1{,}750 \text{ chairs}$$

Step 3: check the total cost at that vol­ume.

$$50{,}000 + 300 \times 1{,}750 = 5{,}75{,}000 \qquad 4{,}00{,}000 + 100 \times 1{,}750 = 5{,}75{,}000$$

Both meth­ods cost ₹5,75,000 at 1,750 chairs.

Step 4: com­pare cost per unit at other vol­umes.

Con­clu­sion: if expected demand is below 1,750 chairs a year, the flex­i­ble job-type work­shop is cheaper. Above 1,750, the high fixed cost of the line is jus­ti­fied by its low vari­able cost. This is exactly why high-vol­ume prod­ucts move towards mass and con­tin­u­ous sys­tems.

Fac­tors that influ­ence the choice of sys­tem

• Vol­ume of demand and how sta­ble it is.
• Vari­ety and cus­tomi­sa­tion cus­tomers expect.
• Nature of the prod­uct: dis­crete items or a flow­ing mate­r­ial.
• Cap­i­tal avail­able for machines and automa­tion.
• Skills of the work­force.
• Tech­nol­ogy avail­able for the process.
• Com­pet­i­tive pri­or­ity: low cost, or flex­i­bil­ity and speed of response.

Firms often use more than one sys­tem. A gar­ment com­pany may mass-pro­duce school uni­forms and run batches of fash­ion items in the same plant. Mod­ern ideas such as mass cus­tomi­sa­tion and flex­i­ble man­u­fac­tur­ing try to com­bine high vol­ume with some vari­ety.

Pro­duc­tion sys­tems in ser­vices

The same ideas apply to ser­vices:

• Job-type ser­vice: per­sonal legal advice, a cus­tom soft­ware project.
• Batch-type ser­vice: train­ing classes taught in groups, a tour bus.
• Mass ser­vice: a fast food chain, a rail­way reser­va­tion counter.
• Con­tin­u­ous ser­vice: elec­tric­ity sup­ply or inter­net ser­vice sys­tems.

Exam answer for­mats

5-mark answer. Types of pro­duc­tion sys­tems are the dif­fer­ent meth­ods used by firms to pro­duce goods and ser­vices. The main types are job, batch, mass and con­tin­u­ous pro­duc­tion. Job pro­duc­tion is used for cus­tomised prod­ucts in small quan­ti­ties. Batch pro­duc­tion is used when goods are made in groups. Mass pro­duc­tion is used for stan­dard­ised prod­ucts in large quan­ti­ties. Con­tin­u­ous pro­duc­tion is used when pro­duc­tion runs with­out inter­rup­tion. These sys­tems dif­fer in quan­tity, vari­ety, cost and flex­i­bil­ity.

2-mark answer. A pro­duc­tion sys­tem is the method used to con­vert inputs into out­puts. Its main types are job, batch, mass and con­tin­u­ous pro­duc­tion.

Mem­ory line. Job = one by one; Batch = group by group; Mass = many iden­ti­cal prod­ucts; Con­tin­u­ous = non-stop pro­duc­tion.

Key terms

Pro­duc­tion sys­tem

The method and arrange­ment used to con­vert inputs into goods or ser­vices.

Inter­mit­tent sys­tem

A sys­tem in which work flows stop-start because prod­ucts vary; includes job and batch pro­duc­tion.

Job pro­duc­tion

Mak­ing one or a few cus­tomised units to a spe­cific cus­tomer order.

Batch pro­duc­tion

Mak­ing a set quan­tity of one prod­uct before chang­ing over to another.

Mass pro­duc­tion

Mak­ing large quan­ti­ties of stan­dard­ised prod­ucts on a line.

Con­tin­u­ous pro­duc­tion

Unin­ter­rupted, highly auto­mated flow pro­duc­tion of a homo­ge­neous prod­uct.

Set-up time

Time needed to pre­pare a machine to make a dif­fer­ent prod­uct or batch.

Break-even vol­ume

The out­put level at which two processes have equal total cost.

Com­mon ques­tions

What is the main dif­fer­ence between batch and mass pro­duc­tion?

Batch pro­duc­tion makes lim­ited quan­ti­ties of sev­eral prod­ucts using gen­eral-pur­pose machines that are reset between batches. Mass pro­duc­tion makes very large quan­ti­ties of one stan­dard prod­uct on ded­i­cated machines arranged in a line, with lit­tle or no changeover.

Is con­tin­u­ous pro­duc­tion the same as mass pro­duc­tion?

Both are high vol­ume, but con­tin­u­ous pro­duc­tion usu­ally han­dles a flow­ing, homo­ge­neous mate­r­ial (oil, cement, elec­tric­ity) and runs non-stop, whereas mass pro­duc­tion assem­bles dis­crete units (cars, fans) and may stop at the end of a shift.

Why is cost per unit high­est in job pro­duc­tion?

Each job needs sep­a­rate plan­ning, skilled labour and set-up, and the cost can­not be spread over many iden­ti­cal units. There are no economies of scale.

Where does project pro­duc­tion fit?

Project pro­duc­tion is used for very large, one-off out­puts such as bridges, ships or dams. It shares the fea­tures of job pro­duc­tion (sin­gle unit, cus­tomised) but is man­aged with project plan­ning tech­niques and often uses a fixed-posi­tion lay­out.

How does a firm decide which sys­tem to use?

It com­pares expected vol­ume and required vari­ety with the costs of each option, as in the break-even exam­ple above, and also con­sid­ers cap­i­tal, skills, tech­nol­ogy and com­pet­i­tive pri­or­i­ties.

Ref­er­ences

1. Chary, S. N. Pro­duc­tion and Oper­a­tions Man­age­ment. McGraw-Hill Edu­ca­tion (India).
2. Pan­neer­sel­vam, R. Pro­duc­tion and Oper­a­tions Man­age­ment. PHI Learn­ing.
3. Steven­son, W. J. Oper­a­tions Man­age­ment. McGraw-Hill Edu­ca­tion.
4. Kra­jew­ski, L. J., Mal­ho­tra, M. K. and Ritz­man, L. P. Oper­a­tions Man­age­ment: Processes and Sup­ply Chains. Pear­son.
5. Slack, N., Bran­don-Jones, A. and Burgess, N. Oper­a­tions Man­age­ment. Pear­son.

Related read­ing

• What is Oper­a­tions Man­age­ment
• Fore­cast­ing In Oper­a­tions Man­age­ment
• Capac­ity Plan­ning in Oper­a­tions Man­age­ment