A production set is a collection of all the possible combinations of input and output associated with the production process of a given company. The idea is to determine that type of output can be generated given the various combinations of the use of resources as inputs into the manufacturing process. The ideal behind defining a production set is to enjoy the highest possible rate of profit maximization by generating the largest number of output bundles within the defined vector of inputs. In layman’s terms, this means earning the highest degree of profit by using available resources to best advantage.
There are several different approaches to defining a product set. One has to do with the assignment of values to each of the inputs involved in the process, which in turn impacts the amount of output resulting from a given combination. This approach makes it possible to find the right balance of raw materials, labor, production time, and other inputs that have a direct impact on the quantity of goods produced.
While a production set is often focused more on the quantity of output possible with a particular vector of inputs used, this does not mean that quality is not a consideration. Here, the object is to protect the process of generating profits by securing raw materials that are of superior quality and designing the production process so that the resulting output is also very high in quality. From time to time, this may be moving to alternative suppliers in order to maintain the quality of the materials purchased for the manufacturing process. As part of the considerations of the production set, identifying areas of the operation that are hindered by waste could possibly result, allowing managers and directors to rework the process to minimize waste and make better use of the resources on hand.
Like many business tools, identifying and evaluating the feasibility of a production set is not a one-time event. As circumstances change, the set must be revisited to determine if some changes in the type and range of inputs must be adjusted in some manner in order to maintain a desirable level of output. For this reason, many companies see this process as ongoing, with evaluations occurring on a more or less regular basis. This is in fact a positive strategy, in that a company that does evaluate its production set regularly stands a better chance of quickly responding to shifts in demand for its products and maintaining the most attractive profit margin possible.