The primary responsibility of the manufacturing activity is to produce a product or products at
1. pre-established cost,
2. according to the specified quality
3. in stipulated time schedule
Thus ultimate objectives can be sub-classified as under:
(i) Manufacturing costs,
(ii) Product quality, and
(iii) Manufacturing time-schedule.
The unit cost of the product should be estimated carefully and every effort should be made to stick to the cost standards. For this purpose, the efforts should be made to segregate the costs into two — direct costs and variable costs. Efforts should be made for the following,
(a) Reduction in the variable costs.
(b) Reduction in the fixed costs.
(c) Increase in the volume of production, so that the fixed costs may be spread over more production resulting in the reduction of per unit absorption.
(d) The allocation of the fixed overheads should be made on scientific basis.
Generally, the product quality standards are often established by the product specifications or by the consumers. The manufacturing organization tries to translate such quality prescriptions into some measurable objectives. It should be noted that the product quality comes in conflict with the manufacturing cost objective and the manufacturing time schedule. The maintenance of the quality should not result in increase in manufacturing costs or delay in the production. A proper balance must be maintained between quality and cost as well as quality and time schedule.
There are many forces which compel side-tracking in the manufacturing activity. The time schedule should not be set for the shipment alone it should be broken up into all the sub-systems like operating cycle time, inventory turnover rate, machine utilization rate, direct and indirect man-hours per unit, capacity utilization, machine and labor idle time, set-up, repair and maintenance time etc. Time schedule objective affects the cost, quality and the goodwill of the business in terms of regularity of shipment.
Production is the result of various types of inputs, like men, materials, machines and manufacturing services. The intermediate objectives strive to attain the optimum utilization of these various types of inputs. The intermediate goals,
Machinery and equipments:
(a) Acquisition of machinery and equipment
(b) Utilization of Machinery and equipment.
The materials objectives must be prescribed in terms of units, rupee value and space requirements.
Manpower is an important input in manufacturing activities. Manpower must be closely allied with objectives of selection, placements, training, rewarding and utilization.
The provision of proper adequate services directly affects the utilization of other inputs such as men, machines and materials.