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Wednesday, 20 June 2012 17:07


Production budget


Inventory policies. Inventory standards should be predetermined as that neither there is a shortage nor over-stocking of goods.

Sales requirements. The quantity of goods to be sold would decide to a great extent how much is to be produced. Therefore, this budget depends upon the sales budget.

Production stability. For reduction of costs, stability in employment and better utilization of plant facilities, the production should be evenly distributed throughout the year. In case of seasonal industries, since it is not possible to have stable levels of production or inventory, an effort should be made to have the optimum balance between the two.

Plant capacity. How much can be produced depends upon the available plant capacity. There must be sufficent capacity to procede the annual requirements and also to meet seasonal high demands.

5. Availability of material and labour. Adequate and timely supply of raw material and labour should have an important effect on the planning of production.
6. Time taken in production process. The production should commence

well in time deeping in view how much time it would take in the factory to translate the raw materials into finished goods.

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