What is Production Function?
Production is a process of transforming tangible and intangible inputs into goods or services. Raw materials, land, labour and capital are the tangible inputs, whereas ideas, information and knowledge are the intangible inputs. These inputs are also known as factors of production.
For an organisation, the four major factors of production are land, capital, labour and enterprise. An organisation needs to make optimum utilisation of these factors to achieve maximum output. The technical relationship between the inputs and the output is expressed by the production function. It enables an organisation to achieve maximum output with the given combinations of factors of production in a particular time period.