efficiency is a level of performance that describes a process that uses the lowest amount of inputs...

EFFICIENCY

Vesile Gaye ÖZGENCİL2009503075

INDUSTRIAL ENGINEERING DEPARTMENT

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What is the Efficiency?

Efficiency is a level of performance thatdescribes a process that

uses the lowest amount of inputs

to create the greatest amount of inputs.

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What is the Efficiency?

Efficiency also can be stated as the act of being

adequate in performance with a minimum of waste, effort, time.

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Time , money , raw material

are limited.

So it makes sense to try to conserve them.

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Efficiency can only be delivered by

improving productivi

typrocurement

processesworking practices

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EFFICIENCY TYPES Economic efficiency

Productive efficiency Financial market efficiency Allocative efficiency Distributive efficiency Dynamic efficiency Technical efficiency

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Economic Efficiency

Economic efficiency refers to the use of

resources so as to maximize the production of

goods and services.

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A situation can be called economically efficient if :

No one can be made better off without making someone else worse off.

No additional output can be obtained without increasing the amount of inputs.

Production proceeds at the lowest possible per-unit cost.

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Productive Efficiency

Productive efficiency,also known as technical efficiency,occurs when the economy is utilizing all

of itsresources efficiently,producing most outputfrom least input.

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Production Possibility Frontier ( PPF )

An example PPF: Points B, C and Dare all productively efficient,but an economy at Awould not be.

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Financial Market Efficiency

Financial market efficiency refers to in financial

markets is the efficiency of allocating resources.

This includes producing the right goods for

the right people at the right price.

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There are three levels ofmarket efficiency.

These are:

Weak-form efficiency

Semi-strong efficiency

Strong-form efficiency

There are four marketefficiency types.

These are:

Information arbitrage efficiency

Fundamental valuation efficiency

Full insurance efficiency

Functional/Operational efficiency

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Allocative efficiency

Allocative efficiency is a measure of the benefit or utility derived from a proposed or actual choice in the distribution or apportionment of resources.

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Distributive efficiency

Distributive efficiency occurs when goods and services are received by those who have the greatest need for them.

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Dynamic efficiency

Dynamic efficiency refers to an economy that

appropriately balances short run concerns with

concerns in the long run. Dynamic efficiency also refers to the

ability to adapt to changed economic conditions

at low cost quickly.

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Technical efficiency

Technical efficiency is the effectiveness with

which a given set of inputs is used to produce

an output.

When technical-efficiency is not being achieved due to a lack of competetive pressure,

X-inefficiency occurs.

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CALCULATING EFFICIENCY

The efficiency of a process is calculatedby dividingthe output by the input, and then multiplying the result by 100.

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Efficiency is usually given as a percentage and

can be computed with the following formula:

Efficiency = Work Output / Work Input (1)

Efficiency rating x 100=Percentage efficiency rating (2)

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WAYS TO IMPROVE EFFICIENCYIN BUSINESSES

Train the workforce

Improve motivation

More capital equipment

Use better quality raw materials

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Train the workforce

Training the workforceincreases improvements inthe workers productivity levels.

Training should enable workers to work more

quickly and more accurately and to produce

better quality products.

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Improve motivationA better-motivated workforcewill work harderand take pride in their work.

There are many different financial (e.g. bonuses)

and non-financial ways (e.g. empowerment)

for businesses to motivate their workers.

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More capital equipment

Investment into new, higher technological

machinery can have number of advantages:

Longer hours can be worked. Machine can perform repetitive and complicated tasks morequickly. Accuracy incerases and thereforewastage can be less.

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Use better quality raw materials

This can reduce the amount of time wasted on rejected or defective products.

A business should ensure they find the supplier who can supply the best quality resources,

but at a competitive price and also with reliable delivery.

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What is the relationship between Efficiency and Effectiveness?

Efficiency and effectiveness were originallyindustrial engineering concepts that came

of age inthe early twentieth century.

Effectiveness is‘doing the right thing’ . Efficiency is‘doing the thing right’.

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Efficiency alone will put your company

on the fast track to bankruptcy. Effectiveness (efficiacy) alone *may*

allow your company to survive. However the company will not reach

its maximum potantial if it is inefficient.

Effectiveness and Efficiency together will almost guarantee success!

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THANK YOU FOR YOUR LISTENING!