DOCSLIB.ORG

Chapter -1 Production and Productivity

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Chapter -1 Production and Productivity CHAPTER -1 PRODUCTION AND PRODUCTIVITY LEARNING OUTCOMES : At the end of this course, students will be able to: Apply the principles of costing in product costing Prepare budgets based on the level of activity and to use concept for production cost control Apply the principle and techniques in production planning and control of a production system Control quality by using different levels of inspection techniques of various stages of production 1. Definition of Production The processes and methods used to transform tangible inputs (raw materials, semi-finished goods, subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services. Resources are used in this process to create an output that is suitable for use or has exchange value. Or Production can be defined as the systematic activity of gradually transforming one form of material into another while maintaining the requisite quality and are capable of satisfying human wants. It tends to combine, tangible inputs, i.e. raw materials, and intangible inputs, i.e. ideas, information, etc. to turn it into finished products for sale, through a mechanical or chemical process. 1. Definition of Productivity Productivity is a measure that gauges the efficiency of the production process, i.e. in transforming inputs such as raw material, labour, capital, etc. into the output of finished goods. It can be expressed in terms of the ratio of outputs produced to inputs consumed, in the given period. Productivity tends to determine the overall production performance of the firms by ascertaining how efficiently the firm utilized its resources in the production of goods and services, with minimum wastage. It can be enhanced by controlling factors of production, improving process and technology. 2. Key Differences Between Production and Productivity The difference between production and productivity can be drawn clearly on the following premises: 1 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 1. Production is an organized activity, wherein step by step conversion of raw materials into useful output takes place. On the contrary, Productivity is an indicator of efficiency in the production in terms of optimum utilization of firm’s resources in the creation of desired output. 2. Production is a process of value addition, wherein at each level, some value is added to the product. Conversely, productivity is a measure of efficiency. 3. Production exhibits the number of units produced by the firm in a given period. As against, productivity highlights the ratio of output to input consumed. 4. Production is always expressed in absolute terms, i.e. the volume of output produced. On the other hand, productivity is denoted in relative terms, meaning that it determines the quantitative relationship between output generated and resources consumed. 5. While production ascertains the value of output generated, productivity determines the how well the resources are utilized by the firm in the generation of output. Conclusion By and large, production and productivity are not contradicting terms, but these are closely connected one. Production is a conversion process, in which the firm is engaged, whereas productivity is all about how efficiently the company allocates its factors to produce the output, with least amount of wastage and essential quality. In short, the efficiency in production is the firm’s productivity. 3. Comparison of Production and Productivity Basis for Comparison Production Productivity 2 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY Meaning Productivity is a measure of Production is a function of an how efficiently resources are organization which is combined and utilized in the associated with the conversion firm, for achieving the desired of range of inputs into desired outcome. output. Measure What is it? Process Ratio of output to input Numbers of units actually Represents produced. Relative terms Expression Absolute terms 5. Factors Affecting Productivity in an Organization 5.1 Selection i.e. selection of right man for a specific job Applying well known saying division of labour. Training i.e. consideration of training requirements whether to be imparted training in the plant itself or to be sent for training outside the unit to other plants within the country or abroad or training institutes. Number of personnel required i.e. man power requirement planning in each of the departments of required skill. 5.2. Equipment and Machines: The number of machine tools, their capacity and accessories required, replacement policy of the organization and maintenance schedules etc. 5.3. Input Materials: i. Appropriate quality of materials ii. Material requirement planning (M.R.P.) iii. Substitute of materials being used iv. Inspection of input materials at various points 3 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY v. Cost of materials procurement and handling up to stores. 5.4. Time: Time is significant for the following reasons: i. Inspection of input materials i.e. raw material and semi finished or finished items required for assembly. ii. Time for inspection of finished products. iii. Production time (total time of manufacturing). iv. Time for repair and maintenance of machines and equipment. 5.5. Floor Area or Space: i. Total area covered by the administrative block, production shop and inspection & quality control departments etc. ii. Location of different departments and shops etc. iii. Other space covered by plant layout. 5.6. Power or Energy: i. Maintenance of equipment for saving energy ii. Use of renewable energy devices iii. Use of biogas, photovoltaic cells, solar energy and other non conventional techniques. 5.7. Finance: Finance is required to maintain all the above requirements. The management should be for minimum rather optimum finance. 5.8. Movement of Man and Materials: i. The required motion of manpower within the plant ii. The motion of raw material semi finished and finished products/items within the plant. 4 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 6 Measurements of productivity Strategy 1: The Simple Productivity Output Formula Strategy Strategy 2: The 360 Degree Feedback Strategy Strategy 3: Time Tracking & Project Management Software Strategy 4: The Monitor Social Media Strategy Strategy 4: The Monitor Social Media Strategy Strategy 5: The Profit = Productivity Strategy Strategy 6: The Daily Check-In Strategy 7 Causes of decrease in productivity Lack of skill: If employees are not skilled they can’t produce more. Lack of cooperation among employees: If one employee cooperates with other, productivity may be increased. On the other hand, if one doesn’t cooperate with others, productivity decreased. Lack of technology: If technology is not modern productivity may be affected. Lack of employee training: Training helps an employee to increase his productivity. Lack of training is one of the causes of poor productivity A relationship between employee & employer: If relationships between employee and employer are good productivity of the employee may be increased. Lack of commitment: If employees are not committed to their organization and his work then productivity may not be up to the mark. The physical condition of the employee: Generally employees’ physical condition has a positive relationship with productivity. Otherwise, it may be hampered. Lack of concentration: If the concentration of the employee is not good for his work then productivity decreases. Lack of cooperation between employee & employer: If employer cooperates with an employee they are willing to do better. On the other hand, if the employer doesn’t cooperate with the employee’s productivity decreases. Lack of favorable environmental condition: If the environmental condition of the organization is not good, then the productivity level may be less. 5 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 8. TYPES of Production System Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems. Types of Production Job-Shop Production : A production process, in which few products are created according to the demand of the customer, in the stipulated time and cost. In job-shop production, product volume is low, and variety is high. Batch Production : Batch production is one wherein product passes through various stages over a series of functional departments, and a number of batches are produced. Mass Production : It is a manufacturing technique in which discrete parts are produced with the help of continuous process. Continuous Production : The process of production in which the production facilities are sequenced as per the production operations chronologically. Classification of production systems 6 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 8.1 JOB SHOP PRODUCTION Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence. Characteristics The Job-shop production system is followed when there is: 1. High variety of products and low volume. 2. Use of general purpose machines and facilities. 3. Highly skilled operators who can take up each job
Load more

Recommended publications
  • Marxist Economics: How Capitalism Works, and How It Doesn't
    MARXIST ECONOMICS: HOW CAPITALISM WORKS, ANO HOW IT DOESN'T 49 Another reason, however, was that he wanted to show how the appear- ance of "equal exchange" of commodities in the market camouflaged ~ , inequality and exploitation. At its most superficial level, capitalism can ' V be described as a system in which production of commodities for the market becomes the dominant form. The problem for most economic analyses is that they don't get beyond th?s level. C~apter Four Commodities, Marx argued, have a dual character, having both "use value" and "exchange value." Like all products of human labor, they have Marxist Economics: use values, that is, they possess some useful quality for the individual or society in question. The commodity could be something that could be directly consumed, like food, or it could be a tool, like a spear or a ham­ How Capitalism Works, mer. A commodity must be useful to some potential buyer-it must have use value-or it cannot be sold. Yet it also has an exchange value, that is, and How It Doesn't it can exchange for other commodities in particular proportions. Com­ modities, however, are clearly not exchanged according to their degree of usefulness. On a scale of survival, food is more important than cars, but or most people, economics is a mystery better left unsolved. Econo­ that's not how their relative prices are set. Nor is weight a measure. I can't mists are viewed alternatively as geniuses or snake oil salesmen. exchange a pound of wheat for a pound of silver.
    [Show full text]
  • 1- TECHNOLOGY Q L M. Muniagurria Econ 464 Microeconomics Handout
    M. Muniagurria Econ 464 Microeconomics Handout (Part 1) I. TECHNOLOGY : Production Function, Marginal Productivity of Inputs, Isoquants (1) Case of One Input: L (Labor): q = f (L) • Let q equal output so the production function relates L to q. (How much output can be produced with a given amount of labor?) • Marginal productivity of labor = MPL is defined as q = Slope of prod. Function L Small changes i.e. The change in output if we change the amount of labor used by a very small amount. • How to find total output (q) if we only have information about the MPL: “In general” q is equal to the area under the MPL curve when there is only one input. Examples: (a) Linear production functions. Possible forms: q = 10 L| MPL = 10 q = ½ L| MPL = ½ q = 4 L| MPL = 4 The production function q = 4L is graphed below. -1- Notice that if we only have diagram 2, we can calculate output for different amounts of labor as the area under MPL: If L = 2 | q = Area below MPL for L Less or equal to 2 = = in Diagram 2 8 Remark: In all the examples in (a) MPL is constant. (b) Production Functions With Decreasing MPL. Remark: Often this is thought as the case of one variable input (Labor = L) and a fixed factor (land or entrepreneurial ability) (2) Case of Two Variable Inputs: q = f (L, K) L (Labor), K (Capital) • Production function relates L & K to q (total output) • Isoquant: Combinations of L & K that can achieve the same q -2- • Marginal Productivities )q MPL ' Small changes )L K constant )q MPK ' Small changes )K L constant )K • MRTS = - Slope of Isoquant = Absolute value of Along Isoquant )L Examples (a) Linear (L & K are perfect substitutes) Possible forms: q = 10 L + 5 K Y MPL = 10 MPK = 5 q = L + K Y MPL = 1 MPK = 1 q = 2L + K Y MPL = 2 MPK = 1 • The production function q = 2 L + K is graphed below.
    [Show full text]
  • Dangers of Deflation Douglas H
    ERD POLICY BRIEF SERIES Economics and Research Department Number 12 Dangers of Deflation Douglas H. Brooks Pilipinas F. Quising Asian Development Bank http://www.adb.org Asian Development Bank P.O. Box 789 0980 Manila Philippines 2002 by Asian Development Bank December 2002 ISSN 1655-5260 The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank. The ERD Policy Brief Series is based on papers or notes prepared by ADB staff and their resource persons. The series is designed to provide concise nontechnical accounts of policy issues of topical interest to ADB management, Board of Directors, and staff. Though prepared primarily for internal readership within the ADB, the series may be accessed by interested external readers. Feedback is welcome via e-mail ([email protected]). ERD POLICY BRIEF NO. 12 Dangers of Deflation Douglas H. Brooks and Pilipinas F. Quising December 2002 ecently, there has been growing concern about deflation in some Rcountries and the possibility of deflation at the global level. Aggregate demand, output, and employment could stagnate or decline, particularly where debt levels are already high. Standard economic policy stimuli could become less effective, while few policymakers have experience in preventing or halting deflation with alternative means. Causes and Consequences of Deflation Deflation refers to a fall in prices, leading to a negative change in the price index over a sustained period. The fall in prices can result from improvements in productivity, advances in technology, changes in the policy environment (e.g., deregulation), a drop in prices of major inputs (e.g., oil), excess capacity, or weak demand.
    [Show full text]
  • The Industrial Revolution in America
    DO NOT EDIT--Changes must be made through “File info” CorrectionKey=TX-A SECTION 1 The Industrial TEKS 5B, 5D, 7A, 11A, 12C, 12D, 13A, Revolution in 13B, 14A, 14B, 27A, 27D, 28B What You Will Learn… America Main Ideas 1. The invention of new machines in Great Britain If YOU were there... led to the beginning of the You live in a small Pennsylvania town in the 1780s. Your father is a Industrial Revolution. 2. The development of new blacksmith, but you earn money for the family, too. You raise sheep machines and processes and spin their wool into yarn. Your sisters knit the yarn into warm brought the Industrial Revolu- tion to the United States. wool gloves and mittens. You sell your products to merchants in the 3. Despite a slow start in manu- city. But now you hear that someone has invented machines that facturing, the United States made rapid improvements can spin thread and make cloth. during the War of 1812. Would you still be able to earn the same amount The Big Idea of money for your family? Why? The Industrial Revolution trans- formed the way goods were produced in the United States. BUILDING BACKOU GR ND In the early 1700s making goods depend- ed on the hard work of humans and animals. It had been that way for Key Terms and People hundreds of years. Then new technology brought a change so radical Industrial Revolution, p. 385 that it is called a revolution. It began in Great Britain and soon spread to textiles, p.
    [Show full text]
  • Machine Tools and Mass Production in the Armaments Boom: Germany and the United States, 1929–441 by CRISTIANO ANDREA RISTUCCIA and ADAM TOOZE*
    bs_bs_banner Economic History Review, 66, 4 (2013), pp. 953–974 Machine tools and mass production in the armaments boom: Germany and the United States, 1929–441 By CRISTIANO ANDREA RISTUCCIA and ADAM TOOZE* This article anatomizes the ‘productivity race’ between Nazi Germany and the US over the period from the Great Depression to the Second World War in the metal- working industry.We present novel data that allow us to account for both the quantity of installed machine tools and their technological type. Hitherto, comparison of productive technologies has been limited to case studies and well-worn narratives about US mass production and European-style flexible specialization. Our data show that the two countries in fact employed similar types of machines combined in different ratios. Furthermore, neither country was locked in a rigid technological paradigm. By 1945 Germany had converged on the US both in terms of capital- intensity and the specific technologies employed. Capital investment made a greater contribution to output growth in Germany, whereas US growth was capital-saving. Total factor productivity growth made a substantial contribution to the armaments boom in both countries. But it was US industry, spared the war’s most disruptive effects, that was in a position to take fullest advantage of the opportunities for wartime productivity growth. This adds a new element to familiar explanations for Germany’s rapid catch-up after 1945. earmament in the 1930s followed by the industrial effort for the Second RWorld War unleashed an unprecedented boom in worldwide metalworking production. Over the entire period from the early 1930s to the end of the Second World War, the combatants between them produced in excess of 600,000 military aircraft and many times that number of highly sophisticated aero- engines.
    [Show full text]
  • Economics 352: Intermediate Microeconomics
    EC 352: Intermediate Microeconomics, Lecture 7 Economics 352: Intermediate Microeconomics Notes and Sample Questions Chapter 7: Production Functions This chapter will introduce the idea of a production function. A production process uses inputs such as labor, energy, raw materials and capital to produce one (or more) outputs, which may be computer software, steel, massages or anything else that can be sold. A production function is a mathematical relationship between the quantities of inputs used and the maximum quantity of output that can be produced with those quantities of inputs. For example, if the inputs are labor and capital (l and k, respectively), the maximum quantity of output that may be produced is given by: q = f(k, l) Marginal physical product The marginal physical product of a production function is the increase in output resulting from a small increase in one of the inputs, holding other inputs constant. In terms of the math, this is the partial derivative of the production function with respect to that particular input. The marginal product of capital and the marginal product of labor are: ∂q MP = = f k ∂k k ∂q MP = = f l ∂l l The usual assumption is that marginal (physical) product of an input decreases as the quantity of that input increases. This characteristic is called diminishing marginal product. For example, given a certain amount of machinery in a factory, more and more labor may be added, but as more labor is added, at some point the marginal product of labor, or the extra output gained from adding one more worker, will begin to decline.
    [Show full text]
  • The Survival of Capitalism: Reproduction of the Relations Of
    THE SURVIVAL OF CAPITALISM Henri Lefebvre THE SURVIVAL OF CAPITALISM Reproduction of the Relations of Production Translated by Frank Bryant St. Martin's Press, New York. Copyright © 1973 by Editions Anthropos Translation copyright © 1976 by Allison & Busby All rights reserved. For information, write: StMartin's Press. Inc.• 175 Fifth Avenue. New York. N.Y. 10010 Printed in Great Britain Library of Congress Catalog Card Number: 75-32932 First published in the United States of America in 1976 AFFILIATED PUBLISHERS: Macmillan Limited. London­ also at Bombay. Calcutta, Madras and Melbourne CONTENTS 1. The discovery 7 2. Reproduction of the relations of production 42 3. Is the working class revolutionary? 92 4. Ideologies of growth 102 5. Alternatives 120 Index 128 1 THE DISCOVERY I The reproduction of the relations of production, both as a con­ cept and as a reality, has not been "discovered": it has revealed itself. Neither the adventurer in knowledge nor the mere recorder of facts can sight this "continent" before actually exploring it. If it exists, it rose from the waves like a reef, together with the ocean itself and the spray. The metaphor "continent" stands for capitalism as a mode of production, a totality which has never been systematised or achieved, is never "over and done with", and is still being realised. It has taken a considerable period of work to say exactly what it is that is revealing itself. Before the question could be accurately formulated a whole constellation of concepts had to be elaborated through a series of approximations: "the everyday", "the urban", "the repetitive" and "the differential"; "strategies".
    [Show full text]
  • Productivity and Costs by Industry: Manufacturing and Mining
    For release 10:00 a.m. (ET) Thursday, April 29, 2021 USDL-21-0725 Technical information: (202) 691-5606 • [email protected] • www.bls.gov/lpc Media contact: (202) 691-5902 • [email protected] PRODUCTIVITY AND COSTS BY INDUSTRY MANUFACTURING AND MINING INDUSTRIES – 2020 Labor productivity rose in 41 of the 86 NAICS four-digit manufacturing industries in 2020, the U.S. Bureau of Labor Statistics reported today. The footwear industry had the largest productivity gain with an increase of 14.5 percent. (See chart 1.) Three out of the four industries in the mining sector posted productivity declines in 2020, with the greatest decline occurring in the metal ore mining industry with a decrease of 6.7 percent. Although more mining and manufacturing industries recorded productivity gains in 2020 than 2019, declines in both output and hours worked were widespread. Output fell in over 90 percent of detailed industries in 2020 and 87 percent had declines in hours worked. Seventy-two industries had declines in both output and hours worked in 2020. This was the greatest number of such industries since 2009. Within this set of industries, 35 had increasing labor productivity. Chart 1. Manufacturing and mining industries with the largest change in productivity, 2020 (NAICS 4-digit industries) Output Percent Change 15 Note: Bubble size represents industry employment. Value in the bubble Seafood product 10 indicates percent change in labor preparation and productivity. Sawmills and wood packaging preservation 10.7 5 Animal food Footwear 14.5 0 12.2 Computer and peripheral equipment -9.6 9.9 -5 Cut and sew apparel Communications equipment -9.5 12.7 Textile and fabric -10 10.4 finishing mills Turbine and power -11.0 -15 transmission equipment -10.1 -20 -9.9 Rubber products -14.7 -25 Office furniture and Motor vehicle parts fixtures -30 -30 -25 -20 -15 -10 -5 0 5 10 15 Hours Worked Percent Change Change in productivity is approximately equal to the change in output minus the change in hours worked.
    [Show full text]
  • The Industrial Revolution!!! ​Ɯ Ɯ​ 1750
    The Industrial Revolution!!! Ɯ Ɯ​ 1750 - Today ​ The Industrial Revolution was a period during which predominantly agricultural, rural societies in Europe and America became industrial and more people lived in cities. Prior to the Industrial Revolution, which began in Britain in the late 1700s, manufacturing** was often ​ ​ done in people’s homes, using hand tools or basic machines. Industrialization marked a shift to powered, special-purpose machinery, factories and mass production. The iron and textile industries, along with the development of the steam engine, played central roles in the Industrial Revolution, which also saw improved systems of transportation, communication and banking. While industrialization brought about an increased volume and variety of manufactured goods and an improved standard of living** for some, it also resulted in often ​ ​ grim employment and living conditions for the poor and working classes. Manufacturing = Making and producing things! Standard of living = How most people live their lives BRITAIN: BIRTHPLACE OF THE INDUSTRIAL REVOLUTION Before the advent of the Industrial Revolution, most people resided in small, rural communities where their daily existences revolved around farming. Life for the average person was difficult, as incomes were meager, and malnourishment and disease were common. People produced the bulk of their own food, clothing, furniture and tools. Most manufacturing was done in homes or small, rural shops, using hand tools or simple machines. A number of factors contributed to Britain’s role as the birthplace of the Industrial Revolution. For one, it had great deposits of coal and iron ore, which proved essential for industrialization. Additionally, Britain was a politically stable society, as well as the world’s leading colonial power, which meant its colonies could serve as a source for raw materials, as well as a marketplace for manufactured goods.
    [Show full text]
  • What Was the Assembly Line ?
    59 WHAT WAS THE ASSEMBLY LINE ? DAVID E. NYE INTRODUCTION Today, ”assembly line” immediately suggests Asian or Latin-American factories where poorly-paid workers make consumer goods for export to the West. For example, many US corporations shifted jobs to northern Mexico beginning in 1965 as part of the Border Industrialization Program. This process accelerated dramatically after January 1, 1994, when the North American Free Trade Agreement (NAFTA) went into effect. It abolished tariffs and made re-importation of assembly line goods easy. By 2000, 1.2 million US jobs had been relocated to Mexico. Most of the Mexicans hired were semi-skilled women, preferred both for their manual dexterity and their willingness to accept low wages.1 Corporations built factories where environmental legislation was lax and unions were weak or non-existent. In such places, “the danger is that repression rather than innovation becomes a competitive advantage.”2 Yet if the assembly line of today is often part of a global production system for offshore, semi-skilled work, at its inception in 1913 the Americans saw the assembly line as the guarantor of high wages and domestic prosperity. This essay reviews the origins of the assembly line, what exactly it was as a technology, and how it was initially understood. In hindsight, it was less a beginning than a mid-point in long- term developments that are still underway. Historians frequently refer to the assembly line as an historical stage, in a sequence from Taylorism to Fordism to “post-Fordism,” with additional stages sometimes included such as “lexible production,” “lean production” and most recently “post- lean production.”3 As convenient as these historical stages once seemed, their proliferation suggests that the whole notion of a sequence was mistaken to begin with.
    [Show full text]
  • Intermediate Microeconomics
    Intermediate Microeconomics PRODUCTION BEN VAN KAMMEN, PHD PURDUE UNIVERSITY Definitions Production: turning inputs into outputs. Production Function: A mathematical function that relates inputs to outputs. ◦ e.g., = ( , ), is a production function that maps the quantities of inputs capital (K) and labor (L) to a unique quantity of output. Firm: An entity that transforms inputs into outputs, i.e., engages in production. Marginal Product: The additional output that can be produced by adding one more unit of a particular input while holding all other inputs constant. ◦ e.g., , is the marginal product of capital. Two input production Graphing a function of more than 2 variables is impossible on a 2-dimensional surface. ◦ Even graphing a function of 2 variables presents challenges—which led us to hold one variable constant. In reality we expect the firm’s production function to have many inputs (arguments). Recall, if you have ever done so, doing inventory at the place you work: lots of things to count. ◦ Accounting for all of this complexity in an Economic model would be impossible and impossible to make sense of. So the inputs are grouped into two categories: human (labor) and non-human (capital). This enables us to use the Cartesian plane to graph production functions. Graphing a 2 input production function There are two ways of graphing a production function of two inputs. 1.Holding one input fixed and putting quantity on the vertical axis. E.g., = ( , ). 2.Allowing both inputs to vary and showing quantity as a level set. ◦This is analogous to an indifference curve from utility theory.
    [Show full text]
  • The Historical Role of the Production Function in Economics and Business
    American Journal of Business Education – April 2011 Volume 4, Number 4 The Historical Role Of The Production Function In Economics And Business David Gordon, University of Saint Francis, USA Richard Vaughan. University of Saint Francis, USA ABSTRACT The production function explains a basic technological relationship between scarce resources, or inputs, and output. This paper offers a brief overview of the historical significance and operational role of the production function in business and economics. The origin and development of this function over time is initially explored. Several various production functions that have played an important historical role in economics are explained. These consist of some well known functions, such as the Cobb-Douglas, Constant Elasticity of Substitution (CES), and Generalized and Leontief production functions. This paper also covers some relatively newer production functions, such as the Arrow, Chenery, Minhas, and Solow (ACMS) functions, the transcendental logarithmic (translog), and other flexible forms of the production function. Several important characteristics of the production function are also explained in this paper. These would include, but are not limited to, items such as the returns to scale of the function, the separability of the function, the homogeneity of the function, the homotheticity of the function, the output elasticity of factors (inputs), and the degree of input substitutability that each function exhibits. Also explored are some of the duality issues that potentially exist between certain production and cost functions. The information contained in this paper could act as a pedagogical aide in any microeconomics-based course or in a production management class. It could also play a role in certain marketing courses, especially at the graduate level.
    [Show full text]