It forms a part of production planning in which the following are decided – what to produce, when to produce, where to produce and how to produce? In such a case, a forecast is made for each step of the production process to identify the difficulties and inefficiency if any
Production target defines how much to produce?
The production target is fixed during the preparation of the production budget when the man, material, method, money are decided.
This production target helps the organisation follow a routine production process and adjust their master schedules when necessary to achieve the desired target.