1. PRODUCTION ANALYSIS

2. SCOPE PRODUCTION POSSIBILITY ANALYSIS. ― ― LAW OF VARIABLE PROPORTION. ― ― LAW OF RETURN TO SCALE. ISOQUANT - ISOCOST ANALYSIS.

3. OUTPUT PRODUCTION PRODUCTION ANALYSIS INPUT PRODUCTION: CONVERSION OR TRANSFORMATION OF INPUTS TO OUTPUT. PROCESS ADDS VALUE TO INPUTS TO SATISFY NEEDS/ WANTS. PRODUCTION: ADDITION OF VALUE/ UTILITY. DEFENCE SERVICES PRODUCERS – THEY SATISFY NEEDS OF NATIONAL SECURITY

4. OUTPUT PRODUCTION ANALYSIS PRODUCTION INPUT PRODUCTION ANALYSIS: LAWS GOVERNING RELATIONSHIP BETWEEN INPUTS & OUTPUTS. LAWS HELP DECIDE OPTIMAL COMBINATION OF INPUTS (RESOURCES) FOR DESIRED RESULTS AT LOWEST COST. DEFENCE SERVICES

5. LAWS LAW OF VARIABLE PROPORTIONS. LAW OF RETURN TO SCALE. ANALYSIS TECHNIQUES PRODUCTION POSSIBILITY ANALYSIS. ISO-COST / ISO-QUANT ANALYSIS. PRODUCTION ANALYSIS

6. OUTPUT PRODUCTION ANALYSIS PRODUCTION INPUT PRODUCTION ANALYSIS: LAWS GOVERNING RELATIONSHIP BETWEEN INPUTS & OUTPUTS. LAWS HELP DECIDE OPTIMAL COMBINATION OF INPUTS (RESOURCES) FOR DESIRED RESULTS AT LOWEST COST.

7. SUBSTITUTION OF RESOURCE WITHIN ONE INPUT ITSELF: INCREASE/ DECREASE ONE INPUT BY ANOTHER. PRODUCTION FUNCTION INFANTRY Vs MECHANISED AD AIRCRAFT Vs MISSILES GUNS Vs GROUND STRIKE AIRCRAFT PRODUCTION FUNCTION RELATIONSHIP BETWEEN INPUTS AND OUTPUTS P = f (R1,R2…Rn )

8. HOW TOTAL & MARGINAL OUTPUT IS AFFECTED BY CHANGE IN ONE INPUT KEEPING OTHER INPUTS CONSTATNT. “AS PROPORTION OF ONE FACTOR IN A COMBINATION OF FACTORS IS INCREASED, MARGINAL & AVERAGE OUTPUTS WILL INCREASE THEN AFTER A POINT, FIRST MARGINAL AND THEN AVERAGE OUTPUT WILL DIMINISH”. APPLICABLE IN SHORT RUN. LAW OF VARIABLE PROPORTIONS

9. EFFECT ON OUTPUT: THREE STAGES INCREASING RETURNS – MARGINAL RETURN RISES CONSTANT RETURNS – MARGINAL RETURN FALLS DIMINISHING RETURNS – MARGINAL RETURN BECOMES NEGATIVE LAW OF VARIABLE PROPORTIONS

10. LAW OF VARIABLE PROPORTIONS LAW OF VARIABLE PROPORTIONS PRODUCTION OF AMN SHELLS PER MACHINE PER HOUR IN ORD FACTORY NO OF WORKERS TOTAL PRODUCTION AVERAGE PRODUCTION MARGINAL PRODUCTION STAGES OF PRODUCTION 1888 2201012 3361216 44812 555118 660105 7608.60 8567- 4

11. LAW OF VARIABLE PROPORTIONS LAW OF VARIABLE PROPORTIONS PRODUCTION OF AMN SHELLS PER MACHINE PER HOUR IN ORD FACTORY NO OF WORKERS TOTAL PRODUCTION AVERAGE PRODUCTION MARGINAL PRODUCTION STAGES OF PRODUCTION 1888I 2201012I 3361216I 44812 II 555118II 660105II 7608.60III 8567- 4III

12. LAW OF VARIABLE PROPORTIONS LABOUR TP MP/AP STAGE I II III 1212 AP MP B A MP > AP AP > MP INCREASING RETURN: INCREASE IN OUTPUT MORE THAN PROPORTIONATE TO INCREASE IN INPUT OPTIMAL POINT IN EMPLOYMENT OF FACTOR CONSTANT RETRUN: INCREASE IN OUTPUT PROPORTIONATE TO INCREASE IN INPUT DIMNISHING RETURN: INCREASE IN OUTPUT LESS THAN PROPORTIONATE TO INCREASE IN INPUT

13. EXAMPLES OF LAW OF VARIABLE PROPORTIONS NO OF AIRCRAFT TAKING PART IN BOMBING MISSION AND DESTRUCTION SOUGHT. NO OF GUNS ALLOTTED TO NEUTRALISE A TARGET AND EFFECT ACHIEVED. AMOUNT OF TIME ALLOCATED TO TRAINING AND STANDARDS ACHIEVED. NO OF MEN ALLOCATED TO A TASK AND OUTPUT. IN SHORT, IN SITUATIONS WHERE ONE FACTOR IS INCREASED, WHILE OTHERS REMAIN CONSTANT.

14. ASSUMPTIONS NO CHANGE IN TECHNOLOGY IMPROVEMENT IN TECHNOLOGY BOUND TO RAISE OUTPUT. ONLY ONE FACTOR VARIABLE, REST CONSTANT. LAW OF VARIABLE PROPORTIONS

15. LAW OF RETURN TO SCALE DEALS WITH EFFECT ON OUTPUT, WHEN ALL INPUTS CHANGE SIMULTANEOUSLY IN SAME RATIO - DOUBLE, TREBLE ETC… LARGER THE SCALE OF ACTIVITIES – LOWER GENERALLY THE COST OF ACHIEVING OUTPUT. ECONOMIES OF SCALE ARISE FROM LARGE SCALE ACTIVITIES.

16. LAW OF RETURN TO SCALE ECONOMIES RESULT FROM EFFICIENT USE OF RESOURCES FULLER UTILISATION OF EXISITING CAPACITY R&D

17. ECONOMIES OF SCALE TRUE ONLY UP TO A POINT. THEN DIS-ECONOMIES SETS IN. THREE STAGES INCREASING RETURNS – MARGINAL RETURN RISES CONSTANT RETURNS – MARGINAL RETURN CONSTANT DIMINISHING RETURNS – MARGINAL RETURN DIMNISHES LAW OF RETURN TO SCALE

18. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE

19. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs

20. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs 2 WORKERS + 6 hrs

21. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs 2 WORKERS + 6 hrs 3 WORKERS + 9hrs 4 WORKERS+ 12 hrs 5 WORKERS +15 hrs 6 WORKERS + 18 hrs. 7 WORKERS + 21 hrs 8 WORKERS + 24 hrs 9 WORKERS + 27 hrs

22. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs 200 2 WORKERS + 6 hrs 500 3 WORKERS + 9hrs 900 4 WORKERS+ 12 hrs 1400 5 WORKERS +15 hrs 1900 6 WORKERS + 18 hrs. 2400 7 WORKERS + 21 hrs 2800 8 WORKERS + 24 hrs 3100 9 WORKERS + 27 hrs 3200

23. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs 200 2 WORKERS + 6 hrs 500300 3 WORKERS + 9hrs 900400 4 WORKERS+ 12 hrs 1400500 5 WORKERS +15 hrs 1900500 6 WORKERS + 18 hrs. 2400500 7 WORKERS + 21 hrs 2800400 8 WORKERS + 24 hrs 3100300 9 WORKERS + 27 hrs 3200100

24. RETURNS TO SCALE RETURNS TO SCALE (PRODUCTION OF AMN SHELLS IN ORD FACTORY PER MACHINE) FACTORS OF PRODN EMP TOTAL PRODUCTS /RETURNS MARGINAL PRODUCT/ RETURNS STAGE OF RETURN TO SCALE 1 WORKER+3 hrs 200 STAGE OF INCREASING RETURNS 2 WORKERS + 6 hrs 500300 3 WORKERS + 9hrs 900400 4 WORKERS+ 12 hrs 1400500 5 WORKERS +15 hrs 1900500STAGE OF CONSTANT RETURNS 6 WORKERS + 18 hrs. 2400500 7 WORKERS + 21 hrs 2800400STAGE OF DECREASING RETURNS 8 WORKERS + 24 hrs 3100300 9 WORKERS + 27 hrs 3200100

25. STAGE 1 STAGE 3 STAGE 2 1 2 3 4 5 6 7 8 9 10 11 MARGINAL OUTPUT NO OF COMPOSITE UNITS OF FACTORS OF PRODUCTION 4321043210 6565 MARGINAL PRODUCT CURVE OPTIMAL POINT IN EMPLOYMENT OF FACTORS LAW OF RETURN TO SCALE

26. DIS-ECONOMIES START OPERATING AS SCALE OF ACTIVITY IS RAISED BEYOND A POINT. OPTIMUM MIX OF INPUTS TO ACHIEVE THE RESULT VARIES WITH THE DEGREE OF RESULT DESIRED. APPLICABLE IN LONG RUN. CDR MUST ANALYSE THAT MARGINAL RETURN IN TERMS OF RESULT NOT LESS THAN MARGINAL INCREASE IN INPUT. LAW OF RETURN TO SCALE

27. PRODUCTION POSSIBILITY ANALYSIS DETERMINES MAX RESULT POSSIBLE WITHIN GIVEN RESOURCE ALLOCATION. ANALYSIS OF ONE INPUT – TWO OUTPUT CASE. DETERMINES MOST EFFICIENT COMBINATION OF TWO FOR MAXIMISING RESULTS WITHIN GIVEN ONE INPUT. TECHNIQUE MAKES USE OF PRODUCTION POSSIBILITY CURVE.

28. PRODUCTION POSSIBILITY ANALYSIS EXAMPLE ALLOCATED BUDGET – C CRORES. ACQUISITION OF OPTIMUM COMBINATION OF OFFENSIVE POTENTIAL (OP) AND DEFENSIVE POTENTIAL (DP). C CRORE – 400 OP OR 930 DP POSSIBLE. DEFENCE PLANNER FORMULATES PRODUCTION POSSIBILITY SCHEDULE.

29. PRODUCTION POSSIBILITY SCHEDULE PRODUCTION POSSIBILITY SCHEDULE ( INPUT- DEFENCE RESOURCES OUTPUT -OP&DP ) POSSIBLE COMBINATIONS OFFENSIVE POTENTIAL DEFENSIVE POTENTIAL A4000 B C D E0940 COMBINATIONS POSSIBLE

30. PRODUCTION POSSIBILITY SCHEDULE PRODUCTION POSSIBILITY SCHEDULE ( INPUT- DEFENCE RESOURCES OUTPUT -OP&DP ) POSSIBLE COMBINATIONS OFFENSIVE POTENTIAL DEFENSIVE POTENTIAL A4000 B300520 C200730 D100870 E0940 COMBINATIONS POSSIBLE REAL SITUATION PRODUCTION POSSIBILITY SCHEDULE CAN BE FORMULATED BASED ON COST BENEFIT ANALYSIS, SYSTEM ANALYSIS AND OR

31. PRODUCTION POSSIBILITY CURVE 020040060080010001200 500 400 300 200 100 0 E1 E2 E3 I2I2 I1I1 NON FEASIBLE COMBINATION DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL COMBINATIONS ON PP CURVE ARE THE UTMOST THAT BUDGET CAN FETCH COMBINATIONS I 1 & I 2 NOT GETTING BEST OUT OF BUDGET PP CURVE FOR BUDGET C + X CRORES EFFICIENCY

32. PRODUCTION POSSIBILITY CURVE 020040060080010001200 500 400 300 200 100 0 E1 E2 E3 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL E4 CONCAVE NATURE OF PP CURVE MARGINAL RATE OF TRANSFORMATION: (MRT) AMOUNT OF ONE OBJECT GIVEN TO ACHIEVE EXTRA AMOUNT OF OTHER MRT: INCREASES PROGRESSIVELY BECAUSE RESOURCES LESS AND LESS ADAPTABLE TO OTHER OBJECT IS DIVERTED.

33. PRODUCTION POSSIBILITY CURVE 020040060080010001200 500 400 300 200 100 0 E1 E2 E3 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL E4 ALL COMBINATIONS ON PP CURVE EFFICIENT: WHICH TO CHOOSE?

34. IC1 A B C D INDIFFERENCE CURVE ALL POINTS YIELD EQUAL LEVEL OF MILITARY UTILITY OR EFFECTIVENESS. DECISION MAKER INDIFFERENT TO CHOICES BETWEEN COMBINATIONS. 020040060080010001200 500 400 300 200 100 0 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL

35. 020040060080010001200 500 400 300 200 100 0 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL IC 2 IC 3 IC 1 INDIFFERENCE MAP EACH CURVE REPRESENTS DIFFERENT LEVEL OF EFFECTIVENESS.

36. PRODUCTION POSSIBILITY CURVE WITH INDIFFERENCE MAP SUPERIMPOSED 020040060080010001200 500 400 300 200 100 0 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL IC 2 IC 3 IC 1 E1 E3 E4 E N N I-INEFFICIENT E- POSSIBLE & OPTIMUM N-NON FEASIBLE I I I E2 E5

37. PRODUCTION POSSIBILITY CURVE WITH INDIFFERENCE MAP SUPERIMPOSED 020040060080010001200 500 400 300 200 100 0 DEFENSIVE POTENTIAL OFFENSIVE POTENTIAL IC 2 IC 3 IC 1 E1 E3 E4 E I I I E2 E5 PP CURVE SHOWS ALL COMBINATIONS UTMOST THAT BUDGET CAN FETCH (EFFICIENCY). INDIFFERENCE CURVE SHOWS ALL COMBINATIONS HAVING EQUAL LEVEL OF MILITARY UTILITY (EFFECTIVENESS).

38. INDIFFERNCE CURVE ANALYSIS NATIONAL SECURITY VS DEVP 0 10 20 3040 50 60 70 80 90 LEVEL OF SECURITY % RATE OF ECO DEVP 20 10 POLICY FEASIBILITY CURVE BASED ON GDP (TOTAL RESOURCES) POLICY FEASIBLE AREA 0

39. INDIFFERENCE CURVE DEFENCE EXP VS DEVP 0 10 20 3040 50 60 70 80 90 LEVEL OF SECURITY % RATE OF ECO DEVP 20 10 INDIFFERENCE CURVES SHOWING THE DEGREE TO WHICH NATIONAL INTERESTS ARE MET IC5 IC 4 IC3 0 IC2 IC1

40. PRODUCTION POSSIBILITY CURVE WITH INDIFFERENCE CURVE SUPERIMPOSED DEFENCE EXP VS DEVP 0 10 20 3040 50 60 70 80 90 LEVEL OF SECURITY % RATE OF ECO DEVP 20 10 INDIFFERENCE CURVES SHOWING THE DEGREE TO WHICH NATIONAL INTERESTS ARE MET IC5 IC 4 IC3 POLICY FEASIBLE AREA 0 POLICY FEASIBILITY CURVE BASED ON GDP (TOTAL RESOURCES) E D C A B IC2 IC1

41. PRODUCTION POSSIBILITY CURVE APPLICATIONS A SQN OF TPT AIRCRAFT LIFTING MEN AND MATERIAL. AN ENGINEER COY CLEARING MINES AND CONSTRUCTING DEFENCES. A SET OF MACHINES PRODUCING TWO PRODUCTS. FORCES USED NOW AND HELD IN RESERVE. ALL SITUATIONS WHERE ONE RESOURCE CAN BE USED FOR TWO PURPOSES

42. ISOQUANT CURVE 020 40 60 80 100 100 80 60 40 20 0 BOMBS BOMBERS 10 TARGETS DESTRUCTION TWO COMBINATION OF INPUTS GIVING SAME OUTPUT MORE BOMBERS WITH SINGLE BOMBS BOMBERS WITH TWO BOMBS LESSER NO OF BOMBERS FLYING MORE SORTIES

43. ISOQUANT CURVES 20 TARGETS 30 TARGETS 40 TARGETS 020 40 60 80 100 100 80 60 40 20 0 BOMBS BOMBERS 10 TARGETS 50 TARGETS DIFFERENT ISOQUANT FOR DIFFERENT OUTPUTS IT IS POSSIBLE TO MOVE TO HIGHER LEVEL OF OUTPUT BY INCREASING ATLEAST ONE INPUT.

44. ISOCOST LINE OR EXCHANGE CURVE OR EQUAL COST LINE OR BUDGET LINE 020 40 60 80 100 100 80 60 40 20 0 BOMBS BOMBERS X Y Y1Y1Y1Y1 VARIOUS COMBINATIONS OF BOMBERS AND BOMBS THAT CAN BE PROCURED IN GIVEN BUDGET

45. ISOQUANT & ISOCOSTCURVES 020 40 60 80 100 100 80 60 40 20 0 BOMBS BOMBERS 20 TARGETS 50 TARGETS 30 TARGETS 40 TARGETS 10 TARGETS E1E1 E ISOCOST shows exchange/ subs between items keeping budget constant (ECONOMY). ISOQUANT shows exchange/ subs between items keeping output constant (EFFECTIVENESS). A BD

46. ISOQUANT AND ISOCOST ANALYSIS APPLICATIONS SITUATIONS WHERE TWO PARTIALLY SUBSTITUTABLE FACTORS PRODUCE SAME OUTPUT. EFFECTIVENESS IN A GIVEN BUDGET. COMBINATION FOR A GIVEN BUDGET AND EFFECTIVENESS. BUDGET INCREASE REQUIRED FOR ENHANCING EFECTIVENESS. REDUCTION IN EFFECTIVENESS DUE TO BUDGET CUT OR INCREASE IN PRICE.