1. The production system of an organization is that part, which produces product of an organization.
2. It is that activity whereby the resources, flowing within the definite system are combined and transformed in controlled manner to add value in accordance with the policies communicated by management.
3. Production system consists of input at one end and output at other.
4. The input and output are connected by series of operations or processes, stages and inspections.
5. Simple Input-Process-Output model of production system is shown in following diagram.

For Example:

1. Manufacturing unit: Production of machine or engine component.

INPUT – Material like M.S, Steel, Screws (if required), machines etc.

PROCESS – Machining, Grinding etc.

OUTPUT – Desired engine component.

2. Service unit: Service provided in hospital.

INPUT – Patient suffering from some disease.

PROCESS – Medical checkup and treatment.

OUTPUT – Healthy or cured patient.