Professional Documents
Culture Documents
The Theory
and
Estimation of Production
Chapter Six
Overview
The production function
Short-run analysis of average
and marginal product
Long-run production function
Importance of production
function in managerial decision
making
Chapter Six
Learning objectives
define the production function
explain the various forms of production
functions
provide examples of types of inputs into a
production function for a manufacturing or
service company
Chapter Six
Learning objectives
Chapter Six
Production function
Chapter Six
Production function
Key assumptions
Chapter Six
Production function
Chapter Six
Production function
Chapter Six
Chapter Six
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if MP > AP then AP
product
is rising
if MP < AP then AP
is falling
MP=AP when AP is
maximized
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MP P
TRP
X
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Chapter Six
MRP = MLC
Copyright 2009 Pearson Education, Inc.
Publishing as Prentice Hall.
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Chapter Six
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Long-run production
function
Chapter Six
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Estimation of production
functions
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Estimation of production
functions
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Estimation of production
functions
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Estimation of production
functions
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Estimation of production
functions
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Estimation of production
functions
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Estimation of production
functions
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Importance of production
functions in managerial
Capacity planning:
decision
makingplanning the amount
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Importance of production
functions in managerial
decision making
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Importance of production
functions in managerial
decision making
Example: Zara
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Importance of production
functions in managerial
decision making
Chapter Six
service activity
production function is
Q = f(X,Y)
where Q = number of calls
X = variable inputs
Y = fixed input
Copyright 2009 Pearson Education, Inc.
Publishing as Prentice Hall.
32
Importance of production
functions in managerial
decision making
Chapter Six
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