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