PRODUCTION EFFICIENCY AND MARKET CONSTRAINTS

 

Laurean BOGDAN, Lucian-Ionel CIOCA

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Abstract: The present paper deals with optimization of production depending on input resources under market constraints. Production efficiency refers to increasing the output with a minimum input. The objectives of the management are: reducing costs of outputs simultaneously with reducing prices of market goods. This is a big challenge for each firm, in order to ensure quality with reducing costs per unit when the market “imposes” the price. Reducing the cost per unit depends on the optimal combination of resources: labor and capital. The paper presents a relation between market price evolution as a constraint and mixing of resources as a management priority. The paper's goal is to determine a relationship between the market demand on the one hand, through the demanded quantity Q_D and the market price P_u, and production expressed as mathematical function obtained by mathematical regression between realized quantity and resources consumed during the production process.

 

Key words: production, efficiency, variable inputs, costs, outputs, market price, optimal combination, resources.