MGMT
lecture 1_day 1_introduction and review of production theory

lecture 1_day 1_introduction and review of production...

Info icon This preview shows pages 1–9. Sign up to view the full content.

1 Efficiency and Productivity Measurement: Basic Concepts D.S. Prasada Rao School of Economics The University of Queensland, Australia
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

2 Objectives for the Workshop 1. Examine the conceptual framework that underpins productivity measurement 2. Introduce three principal methods Index Numbers Data Envelopment Analysis Stochastic Frontiers Examine these techniques, relative merits, necessary assumptions and guidelines for their applications
Image of page 2
3 Objectives for the Workshop 3. Work with computer programs (we use these in the afternoon sessions) TFPIP; EXCEL DEAP FRONTIER 4. Briefly review some case studies and real life applications 5. Briefly review some advanced topics on Thursday and Friday morning
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

4 Main Reference An Introduction to Efficiency and Productivity Analysis (2 nd Ed.) Coelli, Rao, O’Donnell and Battese Springer, 2005 Supplemented with material from other published papers
Image of page 4
5 Outline for today Introduction Concepts Production Technology Distance Functions Output and Input Oriented distance functions Techniques for Efficiency and Productivity Measurement: Index Number methods
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

6 Introduction Performance measurement Productivity measures Benchmarking performance Mainly using partial productivity measures Cost, revenue and profit ratios Performance of public services and utilities Aggregate Level Growth in per capita income Labour and total factor productivity growth Sectoral performance Labour productivity Share in the total economy Industry Level Performance of firms and decision making units (DMUs) Market and non-market goods and services Efficiency and productivity Banks, credit unions, manufacturing firms, agricultural farms, schools and universities, hospitals, aged care facilities, etc. Need to use appropriate methodology to benchmark performance
Image of page 6
7 Efficiency: (i) How much more can we produce with a given level of inputs? (ii) How much input reduction is possible to produce a given level of observed output? (iii) How much more revenue can be generated with a given level of inputs? Similarly how much reduction in input costs be achieved? Productivity: We wish to measure the level of output per unit of input and compare it with other firms Partial productivity measures – output per person employed; output per hour worked; output per hectare etc. Total factor productivity measures – Productivity measure which involves all the factors of production More difficult to conceptualise and measure
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

8 Simple performance measures Can be misleading Consider two clothing factories ( A and B ) Labour productivity could be higher in firm A – but what about use of capital and energy and materials?
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern