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

Philip Powell () and Roger W. Schmenner
Additional contact information
Roger W. Schmenner: Kelley School of Business, Indiana University, Indianapolis, IN, USA, Postal: Kelley School of Business, Indiana University, Indianapolis, IN, USA

Managerial and Decision Economics, 2002, vol. 23, issue 6, 331-342

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.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1057 Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:23:y:2002:i:6:p:331-342

DOI: 10.1002/mde.1057

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().