Theory of Production

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The classical, neoclassical, and decision-orientated Theories of Production represent three historical milestones of hitherto scientific analysis and description of production systems. They originate from the core of business and economic research and investigate operational processes under economical influences. The classical and neoclassical Production Theories set their focus on the description via formula of input factors of a production process (raw materials, intermediates) and their output factors (finished products) in the form of production functions. Cost functions were used to evaluate the cost effectiveness of the described transformational processes. Production resources in the form of material, maintenance resources, and human workforce were therefore the fundamental model parameters of Production Theory. The decision orientated Theory of Production represents an alternative approach, whose main focus is not set in the combination of production factors, but in the way operational relevant decisions of processes are passed on. The human factor, which represents the leading instance in a production system becomes increasingly the centre of attention.