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Basic Production Economy and Logistics

Organizing resources and competence

This course gives you, who work with production, a broad introduction to the subject production economy and logistics. The course explains and discusses the connection between economy and logistics and the basic terminology used in daily work situations.

This course is designed especially to suit group studies. It is divided into five parts, each requiring about 3 hours of active studies. Our suggestion for this course is to plan five study opportunities where a group of student gather to study together.

Objectives: The objective of this education is for you to understand and be able to use various types of economic relationships as well as terminology concerning logistics and production engineering.

Participants: This course is for you, who need a basic introduction to the subject production economy and logistics. You work with these issues as an operator, economist, logistics engineer, planner, purchaser, production technician or with quality and construction.

Qualifications: No previous knowledge is required, but it is preferable if you have some work experience.

Training Method: Basic Production Economy and Logistics is a Premium course and is studied over the internet via our e-learning platform Instant education. Read more about the training method E-learning - Premium courses.

Course Length: Approximately 20 hours active study time, depending on previous knowledge. Each student has access to the course for 6 months.

Price: 432 Euro / student
480 USD / student

Prices excluding VAT.
For large-scale education projects request quotation.

Online price:

417 EURO / student
463 USD / student

Prices excluding VAT.

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Course contents:

Part 1

What is a Company?

A company can be regarded as a chain of suppliers and customers, both internal and external.

How are Companies Formed?

There are different reasons for starting a company. For example, a specific concept or demand for a certain product may arise. The short-term goal is to achieve satisfactory profitability.

What is Business Economics

Business economics is a term used to describe and explain the production, distribution and consumption of goods and services.

The Company’s Stakeholders

A company’s stakeholders are the players, individuals, groups and organizations that have a stake in a company.

Meeting the Customer’s Needs

To a large extent, running a business involves organizing resources and expertise in order to meet the customers’ needs.

The Processing Chain

The flow from raw material to end product often takes place in a long processing chain.

Developing a Production System

There are three methods to manufacture complicated products – handicraft production, mass production and lean production.

The Production Process in a Company

In a production process, raw materials, semi-finished goods and components are converted into goods and services.

The Shifting Boundary between Production and Administration

The boundary between administration and production is becoming less and less fixed.

Contract Manufacturing

Contract manufacturers are often small companies that produce parts and components to products that larger companies manufacture.

What is Logistics?

Logistics can be defined as the science of efficient flows.

Supply Service

Supply service is a comprehensive concept that pertains to a company’s performance in relation to customers.

The Development of Logistics through the Ages

The share of the logistics and production cost on the product’s end price has changed.

Reasons for Keeping Inventory

The primary reason for keeping inventory is related to delivery time. A finished product is always easier to sell.

The Difference between Inventory and Supplies

Both inventory and supplies (stores) involve storing materials and products until they are needed.

Part 2

Basic Financial Concepts

In order to understand how a company’s resources can be used in the best possible manner, we must learn how to use a number of financial concepts.

Results and Profitability

How to measure profitability.

Use of Capital

The amount of capital needed by a company may vary, as does the manner in which the capital is used.

The DuPont Model

A model to analyze where there is greatest potential for improvement within a company.

Interactive DuPont Model

Interactive Du Pont model used to calculate profitability.

Variable and Fixed Costs

A company’s costs can be divided into variable and fixed costs.

Direct and Indirect Costs

One of the main problems of product costing is to determine which costs are caused by or used for a particular cost unit.

Incremental Costs and Joint Costs

The causal connection between action and costs.

Capital Tied up in Inventory

A basic premise for material control is that tied-up capital should be kept at a low level.

Inventory Turnover Rate

Inventory turnover rate is a measure of how quickly the inventory is renewed.

Part 3

Financial Analysis

Introductory description of the methodology for performing a financial analysis.

Financial Control

How to achieve organized control over the company’s decision-making and actions.


The budget as a plan of action for the future expressed in financial terms.

Budgeting Phases

Description of the work behind a budget.

Drawing up Budgets

Description of the budget design using master budgets and sectional budgets.

Budget Review

How to check the actual outcome compared to the budget.

Part 4

Production Systems

Factors included in a production system.

Manufacturing Planning and Control

Introductory description of the planning and control systems used in production processes.

Product Complexity

Introductory description of the factors affecting the manufacturing planning and control.

Product Structure for Planning

Description of systems used for product structure.

Flow Times

Description of various flow times.

Production Control

The purpose of production control.

Planning Principles and Objectives

Principles and objectives for manufacturing planning and control.

Flow of Materials

Two different control principles that are used to control production administratively.

Convergent and Divergent Flows

General description of the two terms.

Capacity Concepts

Description of different kinds of capacities.

Part 5

The Planning Process

Planning levels and level of detail.

What Factors Affect the Flow of Materials?

Functions within a company that affect the flow of materials.

Suboptimization and an Overall Perspective

Description of the effects of suboptimization.

Internal and External Efficiency

Measuring the ability to be efficient.

Meeting Delivery Times

Introductory description of various methods used to make the organization more efficient and to meet the agreed upon date of delivery.

Materials Supply

Description of tasks and responsibilities within the purchasing function.

Key Performance Indicators in Logistics

Logistics efficiency and some of its Key Performance Indicators.

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