Production Economics Integrating the Microeconomic and Engineering P
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 o
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Steven T. Hackman
Production Economics Integrating the Microeconomic and Engineering Perspectives
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Steven T. Hackman Georgia Institute of Technology Atlanta, GA 30332-0205 USA [email protected]
ISBN 978-3-540-75750-4
e-ISBN 978-3-540-75751-1
DOI 10.1007/978-3-540-75751-1 Library of Congress Control Number: 2007938621 2008 Springer-Verlag Berlin Heidelberg This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Typesetting and Production: LE-TEX Jelonek, Schmidt & Vckler GbR, Leipzig, Germany Cover design: WMX Design GmbH, Heidelberg, Germany Printed on acid-free paper 987654321 springer.com
To my family
Preface
A production economist focuses on assessment. Talk to production economists about a particular firm, and they are likely to ask questions such as: How efficient is the firm in utilizing its input to produce its output? Is the firm using the right mix of inputs or producing the right mix of outputs given prevailing prices? How will the firm respond to a price hike in a critical input? How efficient is the firm in scaling its operations? Has the firm improved its productive capability over time? How does the firm compare to its competitors? A production economist will use an aggregate description of technology to answer these questions. A production engineer focuses on optimizing resources. Talk to production engineers about a particular firm, and they are likely to ask a completely different set of questions: How can the firm change its operations to be more productive? Should the firm outsource production of a subassembly or should it be made in-house? How can the firm reduce its production lead times? Should resource capacity be expanded and, if so, which resources should be acquired? Can the firm’s products be redesigned to improve productive efficiency? Which plants (or operations within a plant) should produce which products at what times? A production engineer will use a detailed description of technology to answer these questions. Historically, production economists and engineers do not interact with each other. This is counterproductive because each group could benefit from the other group’s perspective. Production engineers should be interested in the production economists’ questions and the tools they use to answer th
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