IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v23y2002i6p331-342.html
   My bibliography  Save this article

Economics and operations management: towards a theory of endogenous production speed

Author

Listed:
  • Philip T. Powell

    (Kelley School of Business, Indiana University, Indianapolis, IN, USA)

  • Roger W. Schmenner

    (Kelley School of Business, Indiana University, Indianapolis, IN, USA)

Abstract

A firm chooses the production speed and amount of labor that maximizes profit in a perfectly competitive market. Faster production raises management expenses and the unit cost of production mistakes. Adding workers enhances the division of labor on the production line and raises work-in-process inventory. When the division of labor is high, a rise in the wage can increase the optimal production speed and quantity of output. When price falls, optimal production speed and optimal division of labor can move in opposite directions. Output quantity can also rise, generating a downward sloping supply curve in the absence of increasing returns to scale. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • Philip T. Powell & Roger W. Schmenner, 2002. "Economics and operations management: towards a theory of endogenous production speed," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(6), pages 331-342.
    • Handle: RePEc:wly:mgtdec:v:23:y:2002:i:6:p:331-342
    DOI: 10.1002/mde.1057
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/mde.1057
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.1057?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jayachandran N. Variyam & David S. Kraybill, 1994. "Managerial Inputs and the Growth of Rural Small Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 568-575.
    2. Kim, Tai-Yoo & Lee, Jeong-Dong & Park, Yearn H. & Kim, Boyoung, 1999. "International comparisons of productivity and its determinants in the natural gas industry," Energy Economics, Elsevier, vol. 21(3), pages 273-293, June.
    3. Johnson, Steven C & Lahiri, Kajal, 1992. "A Panel Data Analysis of Productive Efficiency in Freestanding Health Clinics," Empirical Economics, Springer, vol. 17(1), pages 141-151.
    4. Georgescu-Roegen, Nicholas, 1970. "The Economics of Production," American Economic Review, American Economic Association, vol. 60(2), pages 1-9, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Corominas, Albert & Lusa, Amaia & Olivella, Jordi, 2012. "A detailed workforce planning model including non-linear dependence of capacity on the size of the staff and cash management," European Journal of Operational Research, Elsevier, vol. 216(2), pages 445-458.
    2. Christopher C. Klein, 2007. "Cost and Production Duality with Time Utilization of Capital," Working Papers 200704, Middle Tennessee State University, Department of Economics and Finance.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ajayi, V. & Pollitt, M., 2022. "Changing times: Incentive regulation, corporate reorganisations, and productivity in the Great Britain’s gas networks," Cambridge Working Papers in Economics 2254, Faculty of Economics, University of Cambridge.
    2. Alaeifar, Mozhgan & Farsi, Mehdi & Filippini, Massimo, 2014. "Scale economies and optimal size in the Swiss gas distribution sector," Energy Policy, Elsevier, vol. 65(C), pages 86-93.
    3. Eshetu Bekele & Zeleke Worku, 2008. "Factors That Affect The Long‐Term Survival Of Micro, Small And Medium Enterprises In Ethiopia," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 548-568, September.
    4. Michalis Nikiforos, 2013. "The (Normal) Rate of Capacity Utilization at the Firm Level," Metroeconomica, Wiley Blackwell, vol. 64(3), pages 513-538, July.
    5. Couix, Quentin, 2020. "Georgescu-Roegen's Flow-Fund Theory of Production in Retrospect," Ecological Economics, Elsevier, vol. 176(C).
    6. Quentin Couix, 2018. "From Methodology to Practice (and Back): Georgescu-Roegen's Philosophy of Economics and the Flow-Fund Model," Post-Print halshs-01854031, HAL.
    7. N. Meccheri & G. Pelloni, 2004. "On the Role of Human Capital and Instruments of Assistance for Rural Entrepreneurship and Development: Evidence from A Case Study Mountainous Italy," Working Papers 504, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Jackie Krafft, 2007. "Mario Morroni: Knowledge, scale and transactions in the theory of the firm," Journal of Evolutionary Economics, Springer, vol. 17(4), pages 517-520, August.
    9. Pérez-Sánchez, Laura À. & Velasco-Fernández, Raúl & Giampietro, Mario, 2022. "Factors and actions for the sustainability of the residential sector. The nexus of energy, materials, space, and time use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    10. World Bank, 2009. "Serbia - Baseline Survey on Cost and Efficiency in Primary Health Care Centers Before Provider Payment Reforms," World Bank Publications - Reports 3036, The World Bank Group.
    11. Andrew J. Hogan & Luisa Franzini & James R. Boex, 2000. "Estimating the cost of primary care training in ambulatory settings," Health Economics, John Wiley & Sons, Ltd., vol. 9(8), pages 715-726, December.
    12. Hense, Andreas & Stronzik, Marcus, 2005. "Produktivitätsentwicklung der deutschen Strom- und Gasnetzbetreiber: Untersuchungsmethodik und empirische Ergebnisse," WIK Discussion Papers 268, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    13. Capece, Guendalina & Costa, Roberta & Di Pillo, Francesca, 2021. "Benchmarking the efficiency of natural gas distribution utilities in Italy considering size, ownership, and maturity," Utilities Policy, Elsevier, vol. 72(C).
    14. Frédéric CREPLET & Olivier DUPOUET & Francis KERN & Francis MUNIER, 2000. "Tie Organizational and Cognitive Duality of the firm with community concept," Working Papers of BETA 2000-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    15. Bianchi, Patrizio & Labory, Sandrine, 2019. "Manufacturing regimes and transitional paths: Lessons for industrial policy," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 24-31.
    16. Giampaolo Garzarelli & Riccardo Fontanella, 2011. "Open Source Software Production, Spontaneous Input, and Organizational Learning," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(4), pages 928-950, October.
    17. Lynne, Gary D. & Boggess, William G. & Portier, Kenneth M., 1984. "Irrigation Water Supply As A Bioeconomic Process," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(2), pages 1-10, December.
    18. Hawdon, David, 2003. "Efficiency, performance and regulation of the international gas industry--a bootstrap DEA approach," Energy Policy, Elsevier, vol. 31(11), pages 1167-1178, September.
    19. Arnaud Diemer, 2010. "Comment construire des savoirs transversaux face à l'excès d'économie ?," Post-Print halshs-00957874, HAL.
    20. de Regt, E.R., 1999. "Wage bargaining, working time and unemployment," Research Memorandum 027, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:23:y:2002:i:6:p:331-342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.