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Last updated date: 23rd May 2024
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What Do Understand By The Functions of Production?

Production is one of the most widely used terms and it is constantly found in the conversations of business magnets. Be it small-scale industries or large-scale industries, the type and the size of the firm or organization don’t matter since everyone works their best for achieving success. The success can be quantified in terms of quantity and quality of the production for the companies. Here we will have brief documentation of the term production and what it means in commerce. 

Definition of Production

The term product can be defined in terms of commerce and economics. Production essentially refers to the procedure of using numerous inputs for obtaining the required output. This output is known as production. The production should be quantitative as well as qualitative. This is the basic definition of production however it is a vast subject that covers different aspects and concepts. 

The Different Types of Production

There are various types of products that can be categorised into numerous categories.

  • Unit or Job Production: This is the single unit of production to a single customer. The term unit suggests the same theory. Bakeries, Restaurants, Tailoring shops amongst others come under this category. Its features are dependent on customer service and support. It also depends on human resources such as communication, skill etc. than the machinery.

  • Batch Production: This is another important classification that concentrates on the production of the group of products within the same period. Most appliances and durables fall in this category. The manufacturer knows the volume of products that is required before the start of production. This type of production depends on the season and involves high risk if it has to stop in the middle.

  • Mass or Flow Production: This type of production applies to large-scale industries since they produce goods and items in bulk quantity and once the production is completed they start all over again. This type of production needs large capital. The car manufacturers are an example of this type of production. 

  • Process or Continuous Production: This has similarities with mass production however it is a completely different type of production. In this type, the process plays a key role since the process of manufacturing goes on continuously. Brewing is one example of continuous production.

Different Components of Production

So far, we have covered ‘what is meant by production?’ and, ‘what are the types of production in economics?’. Besides these, we have another classification of production based on a process. They are as follows. 

  • Primary Production: It is the first phase of the production process. The collection and extraction of raw materials take place in this stage. It plays a vital role in hardware and large-scale industries. In this phase, the collection of funds and investment are essential.

  • Secondary Production: It is the mid-phase of production. It involves both machinery and manual work in parallel. It focuses on the utilization of raw materials effectively to get more productivity. Here we need working capital.

  • Tertiary Production: It is the last and significant phase as all the packaging, and distribution of goods happens here. It is the phase where we can earn returns for our qualitative products. It involves certain risks too.

Production is the maximum utilization of the available resources and it undergoes various processes for producing the goods and services. The function of production is necessary and fundamental to every business since the returns depend majorly on productivity. The production definition in economics can be found within the process itself. A good grasp of the production concept helps the entrepreneur in shaping their business accordingly.


These notes are created by subject-specific experts and academics with excellent knowledge of the topic. These notes are highly accurate, provide lucid explanations and illustrations wherever necessary, and thus provide an excellent learning material resource for the students to prepare for their exams. 

FAQs on Production

1. What is the Main Role of Production in Business?

The production process involves producing goods depending on the customer requirements through the use of both intangible and tangible outputs. The survival and thriving of every organisation depend on efficient production. The type of production can either destroy or develop any business. There are numerous production types however all of these have the same objective of growth of the organisation. The production helps in understanding customers, developing social relationships, generating employment, and extracting creative skills out of human resources.

2. How can the Production Function be defined?

The production function is the mathematical relationship between obtained outputs and utilised inputs. This can be displayed on the graph for a better grasp of the situation to the owner. The utilised inputs are the factors of the production and it can be mathematically represented as Q = f (L, C, N) where the Q = quantity of input, C = Capital,  L =  Land, and N = Number of labourers.  We can plot the Q value on one of the axes and the output can be plotted on the other axis. 

3. What are the Different Characteristics of a Production Function?

As we mentioned the production function is the relation that represents the relationship associated with the inputs and outputs of the business. Its characteristics are Sustainability, Specificity, and Complementarity.

We will have a brief look at one of these features. Sustainability - This helps in explaining how the labour capital, the proportion of land, and other resources have an effect on the rise or fall of output. This helps the entrepreneurs in substituting other factors depending on the law of production for reducing the cost.