Production Economics

Name: Production Economics
Brand: Springer Nature B.V.
Price: 199 AUD

Integrating the Microeconomic and Engineering Perspectives

By: Steven T. Hackman

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Hardcover | 10 December 2007

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548 Pages

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22.86 x 15.88 x 3.18

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A production economist focuses on assessment, and will use an aggregate description of technology to answer such questions as: How does the firm compare to its competitors? Has the firm improved its production capabilities? A production engineer focuses on optimizing resources, and will use a detailed description of technology to answer a completely different set of questions: Which operations or plants should produce which products at what time? Should resource capacity be expanded and, if so, which resources should be acquired? Each group could benefit from the other group's perspective.

This scholarly yet accessible book offers a unified, integrated point of view that bridges the gap between these two historically distinct perspectives. It includes over 125 exercises with comprehensive solutions and a mathematical appendix.

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You Can Find This Book In

Non-Fiction Economics Economic Theory & Philosophy Microeconomics Industry & Industrial Studies Business & Management Management & Management Techniques Management of Specific Areas Production of Quality Control Management Engineering & Technology Technology in General Engineering in General

Operational Research

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Published: 19th October 2010

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Overview	p. 1
Introduction	p. 1
Microeconomic Foundations	p. 2
Efficiency Measurement	p. 6
Productivity and Performance Measurement	p. 8
Engineering Models of Technology	p. 10
Mathematical Appendix	p. 13
A Word of Advice	p. 14
Microeconomic Foundations
Production Functions	p. 19
Parametric Forms	p. 19
Rate of Technical Substitution	p. 21
Elasticity	p. 24
Elasticity of Output, Scale and Returns to Scale	p. 25
Elasticity of Substitution	p. 26
Homothetic Production Functions	p. 28
Exercises	p. 30
Bibliographical Notes	p. 31
Solutions to Exercises	p. 32
Formal Description of Technology	p. 35
Primitive Elements	p. 35
Input and Output Disposability	p. 37
Efficient Frontiers	p. 38
Axioms for a Well-Behaved Technology	p. 38
Single-Output Technologies	p. 39
Extrapolation of Technology	p. 41
Convexity	p. 41
Disposability	p. 42
Constant Returns-to-Scale	p. 43
Example	p. 45
Exercises	p. 47
Bibliographical Notes	p. 48
Solutions to Exercises	p. 49
Nonparametric Models of Technology	p. 53
Simple Leontief or Fixed-Coefficients Technology	p. 53
General Leontief Technology	p. 55
Production Function	p. 56
Properties	p. 56
Graphical Construction	p. 58
Nonparametric Constructions	p. 60
The Hanoch-Rothschild Model of Technology	p. 60
Data Envelopment Analysis Models of Technology	p. 61
Graphical Constructions	p. 63
Exercises	p. 66
Bibliographical Notes	p. 67
Solutions to Exercises	p. 68
Cost Function	p. 71
Definition	p. 71
Properties	p. 71
Geometry	p. 71
Homogeneity	p. 73
Concavity	p. 73
Example: Cobb-Douglas Technology	p. 73
Sensitivity Analysis	p. 76
Sensitivity to Output	p. 76
Sensitivity to Price: Shephard's Lemma	p. 77
Nonparametric Estimation	p. 78
Leontief Technologies	p. 78
HR Technology	p. 79
CRS and VRS Technologies	p. 79
Reconstructing the Technology	p. 80
Outer Approximation of Technology	p. 82
Cost and Production	p. 83
Homothetic Technologies	p. 84
Appendix	p. 85
Exercises	p. 86
Bibliographical Notes	p. 89
Solutions to Exercises	p. 90
Indirect Production Function	p. 97
Definition	p. 97
Properties	p. 98
Duality between the Cost and Indirect Production Functions	p. 99
Reconstructing the Technology	p. 100
Revealed Preference	p. 101
Nonparametric Estimation	p. 102
Exercises	p. 103
Bibliographical Notes	p. 104
Solutions to Exercises	p. 105
Distance Functions	p. 109
Definition	p. 109
Input Distance Function	p. 109
Output Distance Function	p. 110
Properties	p. 111
Efficiency and Cost	p. 112
Reconstructing the Input Distance Function from the Cost Function	p. 114
Application to Homothetic Technologies	p. 117
Appendix	p. 118
Exercises	p. 120
Bibliographical Notes	p. 120
Solutions to Exercises	p. 121
Nonconvex Models of Technology	p. 125
Resource Allocation	p. 125
Aggregate Production Function	p. 126
Counter-Example to Quasiconcavity	p. 127
Producer Budgeting	p. 129
Multi-Dimensional Indirect Production Function	p. 129
Counter-Example to Quasiconvexity	p. 129
Data Envelopment Analysis with Lower Bounds	p. 130
Fixed-Charge Technology	p. 130
Nonconvex Geometry of the Fixed-Charge Technology	p. 132
The Low Intensity Phenomenon	p. 133
Projective-Convexity	p. 135
Definitions and characterizations	p. 136
Separation Properties	p. 139
Dual Characterization	p. 141
Exercises	p. 143
Bibliographical Notes	p. 143
Solutions to Exercises	p. 144
Efficiency Measurement
Efficiency Analysis	p. 149
Input and Output Efficiency	p. 149
Scale Efficiency	p. 151
Cost Efficiency	p. 152
Joint Input-Output Efficiency	p. 153
Computing Input Efficiency	p. 154
CRS Technology	p. 154
VRS Technology	p. 156
HR Technology	p. 156
Computing Output Efficiency	p. 157
Computing Cost Efficiency	p. 158
Computing Joint Input-Output Efficiency	p. 158
Exercises	p. 159
Bibliographical Notes	p. 161
Solutions to Exercises	p. 162
The Two-Dimensional Projection	p. 167
Definition	p. 167
Characterizations	p. 168
Computing Efficiency	p. 171
Scale Characterizations	p. 172
Example	p. 172
Extensions	p. 175
Pivoting Algorithm	p. 176
Vertices and the Simplex Tableau	p. 177
Pivot Operation	p. 178
Phase I	p. 180
Phase II	p. 181
Exercises	p. 183
Bibliographical Notes	p. 185
Solutions to Exercises	p. 186
Multi-Stage Efficiency Analysis	p. 191
A Representative Multi-Stage System	p. 192
Description of Multi-Stage Technology	p. 193
Classical Models of Technology	p. 193
Expanded Model of Technology	p. 194
Expanded Subsystem Technology Sets	p. 196
Pareto efficient Frontiers	p. 197
Aggregate Efficiency	p. 199
Measures of Aggregate Input Efficiency	p. 199
Derived Measure of Aggregate Efficiency	p. 200
Computational Results	p. 201
A Consistent Pricing Principle	p. 203
Extensions	p. 205
Bibliographical Notes	p. 205
Efficiency Analysis of Warehouse and Distribution Operations	p. 207
Business Environment	p. 207
Description of Technology	p. 208
Input Categories	p. 208
Output Categories	p. 209
Caveats	p. 211
Measuring Operating Efficiency	p. 211
Empirical Results	p. 214
Current Assessment	p. 215
Data and Results	p. 216
Exercises	p. 220
Bibliographical Notes	p. 220
Productivity and Performance Measurement
Index Numbers	p. 223
Motivating Example	p. 223
Price Indexes	p. 227
Konus Price Index	p. 227
Laspeyres and Paasche Price Indexes	p. 228
Fisher and Tornqvist Price Indexes	p. 230
Fisher Ideal Price Index	p. 230
Tornqvist Price Index	p. 231
Implicit Quantity Indexes	p. 233
Quantity Indexes	p. 233
Implicit Price Indexes	p. 234
Exercises	p. 235
Bibliographical Notes	p. 237
Solutions to Exercises	p. 238
Productivity Measurement	p. 241
Growth Rates	p. 241
Growth Accounting Approach	p. 243
Multi-Output Productivity Measurement	p. 245
Nonparametric Approach	p. 246
Input Productivity Change	p. 246
Output Productivity Change	p. 248
Exercises	p. 250
Bibliographical Notes	p. 252
Solutions to Exercises	p. 253
Performance Measurement	p. 257
A Manufacturing Example	p. 257
Performance Indexes	p. 259
Productivity Assessment	p. 261
Performance Ratios	p. 262
Profitability Ratio	p. 263
Productivity Ratio	p. 264
Price Recovery Ratio	p. 264
Distribution of Net Gain	p. 265
Net Gain	p. 266
Net Gain Due to Productivity	p. 267
Net Gain Due to Price Recovery	p. 267
Exercises	p. 268
Bibliographical Notes	p. 268
Solutions to Exercises	p. 269
Economic Analysis	p. 271
Market Structure and Equilibrium	p. 271
Competitive Market Structure	p. 273
Consumers	p. 273
Producers	p. 274
Equilibrium	p. 274
Comparative Statics	p. 276
Monopolistic Competitive Market Structure	p. 277
Social Planner's Perspective	p. 278
Oligopoly Market Structure	p. 279
Profit Maximization Formulation	p. 279
Equilibrium	p. 280
Algorithm to Compute the Equilibrium	p. 282
Comparison to Competitive and Monopolistic Competitive Market Structures	p. 283
Productivity Analysis	p. 284
Analysis of a Productivity Laggard	p. 284
Analysis of a Productivity Leader	p. 284
Exercises	p. 284
Bibliographical Notes	p. 287
Solutions to Exercises	p. 288
Engineering Models of Technology
Index-Based Dynamic Production Functions	p. 295
A Motivating Example	p. 295
Input-Output Domain	p. 297
Event-Based Flows	p. 298
Rate-Based Flows	p. 298
Instantaneous Processes	p. 298
Index-Based Processes	p. 299
Definition	p. 299
Fixed Proportions, Instantaneous Model	p. 300
Fixed Proportions, Constant Lead Time Models	p. 300
Exercises	p. 304
Bibliographical Notes	p. 305
Solutions to Exercises	p. 306
Distribution-Based Dynamic Production Functions	p. 309
Description	p. 309
Overview	p. 309
Definition	p. 310
Lead Time Density	p. 311
Technical Remarks	p. 312
Constant Lead Time Processes	p. 313
Description	p. 313
Integer Lead Times	p. 314
Noninteger Lead Times	p. 315
Non-Integer Lead Times with Unequal Length Periods	p. 318
Time-Dependent Lead Time Processes	p. 320
Description	p. 320
First-In, First-Out Example	p. 321
Leapfrog Example	p. 322
Continuous Lead Time Processes	p. 324
Description	p. 324
Examples	p. 326
Exercises	p. 329
Solutions to Exercises	p. 331
Dynamic Production Function Approximations	p. 337
Load-Dependent Processes	p. 337
Formulation	p. 338
Example	p. 339
Linear Approximation	p. 340
Load-Dependent, Linear Approximation	p. 346
Two-Point Boundary Approximation	p. 348
Relative Area Ratio	p. 349
Linear Approximation	p. 350
Example	p. 351
Extensions	p. 353
Application to Project-Oriented Production Systems	p. 356
Description	p. 356
Detailed Activities	p. 357
Aggregate Activities	p. 358
Aggregate Dynamic Production Function	p. 360
Aggregation of Dynamic Production Functions	p. 361
Serial Aggregation	p. 361
Parallel Aggregation	p. 362
Estimation via Dynamic Activity Analysis	p. 362
Basic Model	p. 362
Extensions	p. 363
Exercises	p. 364
Bibliographical Notes	p. 365
Solutions to Exercises	p. 366
A Stochastic Input-Output Model	p. 373
Input-Output Model with Single Inputs	p. 373
Input-Output Model with Batch Input	p. 375
Simultaneous Batch Case	p. 376
Independent Batch Case	p. 377
Confidence intervals	p. 378
Without Batch Input	p. 378
With Batch Input	p. 379
Linear Approximation	p. 382
Exercises	p. 383
Bibliographical Notes	p. 385
Solutions to Exercises	p. 386
Multi-Stage, Dynamic Models of Technology	p. 391
Basic Model	p. 392
Primitives	p. 392
Material Balance and Service Capacity Constraints	p. 393
Index-Based Models	p. 394
Instantaneous Processes	p. 394
Constant Lead Time Processes	p. 395
Multi-Event, Constant Lead Time Processes	p. 396
Continuous Lead Time Based Processes	p. 397
Initial Conditions	p. 398
Computational Models	p. 401
A Manufacturing Example	p. 404
Production Process Description	p. 404
Formulation	p. 404
Extensions	p. 407
Assembly with Rework Example	p. 408
Production Process Description	p. 408
Formulation	p. 409
Extensions	p. 411
Extensions to the Basic Model	p. 411
Material Balance Constraints	p. 411
Transfers of Product or Materials	p. 412
Activity Constraints	p. 412
Service Output	p. 413
Alternate Production Processes	p. 413
Load-Dependent, Multi-Product, Single-Stage Model	p. 414
Efficiency and Productivity Measurement	p. 417
Input and Output Efficiency	p. 417
Cost and Allocative Efficiency	p. 417
Productivity Assessment	p. 418
Computation	p. 418
Bibliographical Notes	p. 418
Optimizing Labor Resources Within a Warehouse	p. 421
Introduction	p. 421
System Description	p. 422
Business Environment	p. 422
Material Flow	p. 423
Workforce Schedule	p. 423
Sources of Inefficiency	p. 423
An Optimization Model	p. 425
Parameters	p. 425
Decision Variables	p. 426
Constraints	p. 427
Objective Function	p. 428
Implementation	p. 429
Computational Issues	p. 429
Using the Prototype Model: A Case Study	p. 430
Benefits and Other Applications	p. 430
Bibliographical Notes	p. 431
Mathematical Appendix
Notation and Mathematical Preliminaries	p. 435
Logical Statements	p. 435
Sets	p. 435
Vectors	p. 438
Correspondences	p. 439
Functions	p. 440
Matrices	p. 442
Differentiability	p. 444
Real Analysis	p. 449
Linear Spaces	p. 449
Definition	p. 449
Examples	p. 450
Linear Independence and Dimension	p. 451
Normed Linear Spaces	p. 451
Definition	p. 451
Examples	p. 452
Metric Spaces	p. 453
Definition	p. 453
Open and Closed Sets	p. 454
Closure and Boundary	p. 454
Convergence and Limits	p. 456
Completeness	p. 456
Compactness	p. 457
Continuity	p. 458
Connectedness	p. 460
Bibliographical Notes	p. 460
Convex Sets	p. 461
Definition and Examples	p. 461
Convexification	p. 462
Separation of a Convex Set and a Point	p. 463
Strict Separation	p. 463
Supporting Hyperplanes	p. 464
Polar Cones	p. 464
Polyhedra	p. 465
Definition and Examples	p. 465
Extreme Points and Directions	p. 466
Characterization of Extreme Points and Directions	p. 467
Representation Theorem for Polyhedra	p. 470
Application to Linear Programming	p. 471
Bibliographical Notes	p. 472
Concave, Convex Functions and Generalizations	p. 473
Definitions	p. 473
Quasiconcavity and Quasiconvexity	p. 474
Differential Characterizations	p. 476
Optimality Conditions	p. 479
Unconstrained Problems	p. 479
Problems with Inequality Constraints	p. 480
Lagrangian Duality	p. 482
Application of Duality to Economic Lot Sizes	p. 486
Application of Duality to Linear Programming	p. 487
Bibliographical Notes	p. 489
Envelope Theorem	p. 491
Statement and Proof	p. 491
Application to Sensitivity Analysis of Cost	p. 493
A Monopoly Pricing Example	p. 493
Bibliographical Notes	p. 494
Correspondence Theory	p. 495
Core Concepts	p. 495
Characterization by Sequences	p. 498
Bibliographical Notes	p. 499
Theorem of the Maximum	p. 501
Application to the Indirect Production Function	p. 502
Application to the Cost Function	p. 503
Bibliographical Notes	p. 505
Probability Basics	p. 507
Binomial Random Variables	p. 507
Poisson Random Variables	p. 507
Poisson Processes	p. 508
Moment Generating Functions	p. 509
Conditional Expectation and Variance	p. 509
Bibliographical Notes	p. 510
References	p. 511
Index	p. 517
Table of Contents provided by Publisher. All Rights Reserved.

Production Economics

Integrating the Microeconomic and Engineering Perspectives

At a Glance

Hardcover

Shipping

How to return your order

Defective items

You Can Find This Book In

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