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There is a light green box to the right of your worktable in your factory. I believe the maximum level is 4 or 5 for production and same for progress or the other way around. Let me check & get back to you.
Definitely get 2 books to start. If you have a surplus of books, they sell for a nice profit ~~ especially when the market is high.
Research Notes can be used at the Smart Control Center, a console to the right of the Auto workstation, to upgrade the speed at which the Factory produces items.
According to the table under Factory#Upgrades, the player needs to purchase at least 55 Research Notes, to realise all achievable factory upgrades.
*The above information copied from Wiki My Time At Portia.
The price for each research book is 10 disks.
So for making aluminum plates for example it will use the raw materials instead of the alu. bars, that's how it works for me.
What machines you put in there will be totally dependant on what you want to make, but I find that the most useful and needed ones are smelting and electric furnace smelting. For Blender and grinder its enough to have like one blender I find, since I rarely make too much with them.
For grinder I use comprehensive grinder because they also provide smelting, and grinder is not much needed either, so I find 2 is enough for me. For cutting I prefer industrial cutters as they provide way more cutting power than the comprehensive version, but I still added one comprehensive to complement.
I also use 3 advanced skivers to make tons of rope with the cotton I plant, then use it for making herb fences. The aluminum I use to make those windwheels and the steel plates can be used to make safety boxes to sell. All those things will make more money than I will ever need in very little time, I wish there was an even more expensive end game items so you can money sink like a few millions at least so all that work can be put to use..
This is how it looks for now, I will be replacing the civil furnaces in the back with industrial and electric furnaces when I get around to it.
https://steamuserimages-a.akamaihd.net/ugc/766098997041074943/72B1028D4A9240AA3DFF2F23158BED18A31E8319/
I did a little test on mine took out the comprehensive cutter and took a screenshot, as you can see mine doesn't even give the option to make steel plates out of bars, and I have only industrial cutters in the screen.
I don't keep any bars in the factory storage, I use the normal chests for produced items, check that out too I guess.
https://steamcommunity.com/sharedfiles/filedetails/?id=1870295093
This actually was the answer to the problem you damn saint. Seems like the factory prioritizes bars over raw materials as long as it has access to them, removing them made it use raw materials, thread question solved.
https://steamuserimages-a.akamaihd.net/ugc/779609762219652435/8A2D99A9E0B2186A457F95CE4F9E1F807F6284C4/
https://steamuserimages-a.akamaihd.net/ugc/779609762219651128/CF085186AE4C5770B956D0C76DF58642F2D1E05B/
I upgraded the factory to full capacity the same day I got it, had over 1k data discs in my inventory and the money and materials for level 2 so switched all my production to factory asap.
To be honest it's hard to have a bad setup on the factory because it's pretty overpowered, every machine multiplies itself x10 so the output capacity of the factory is inmense.
Im still at the start of road to the somber marsh quest, got a lot to do still to finish the game.