Cost and Optimization in Government

By Aman Khan | Go to book overview

developed based on a set of agreed upon performance standards, which serve as base. All individual tasks are compared against this standard and the deviations from the standard then provide a measure of efficiency.

Two other measures occasionally used in this context are synthetic rating 7 and the Westinghouse performance rating 8 both of which require human judgments applied to a set of criteria or attributes, such as dexterity, certainty, effectiveness, physical application, and so on, which function as a benchmark for comparison.


SUMMARY AND CONCLUSION

Productivity is vital to the successful operation of an organization. It is the principal instrument by which one determines the extent to which an organization has been able to successfully utilize its resources. This chapter has presented several measures of productivity: productivity index, production function, data envelopment analysis, the learning curve, and time study. Productivity indices, in particular production functions are useful in determining the level of efficiency in an organization, especially where multiple inputs are concerned. However, because of their analytical sophistication, production functions are likely to produce results that can be more easily subjected to statistical tests for reliability than those produced by conventional productivity indices.

Data envelopment analysis, on the other hand, can be used to compare efficiency of similar service organizations involving multiple inputs as well as outputs. It is particularly sensitive to output mix and can provide a fairly comprehensive measure of efficiency that is difficult to obtain from most production functions. From a slightly different perspective, the learning curve provides a useful alternative to measuring efficiency and productivity. It can be used in a variety of situations and organizational settings, but there are limits to how much it can accomplish. For instance, one may unrealistically assume that the learning rate can be infinitely increased regardless of the nature of the job being performed. For the vast majority of jobs, the human ability to learn is a function of what one calls psycho-motor conditions, such as a person's age, his or her nervous system, and how much the person has been required to learn in the past, which vary from individual to individual.

Finally, time study is a method of establishing an allowed time standard for performing a task based on the measurement of work contents. The purpose of time study is to determine a set of reliable standards by which an organization can measure the efficiency of its operations, usually by investigating the difference between actual and standard times. Reliable time standards are also useful as a tool by which an organization can increase its output capacity by making the best use of its labor and equipment, thereby cutting down wastes or abuses in the process.

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Cost and Optimization in Government
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgments xii
  • Chapter 1 Basic Cost Concepts 1
  • Chapter 2 Cost Behavior 23
  • Notes 59
  • Chapter 3 Cost Analysis 60
  • Notes 105
  • Chapter 4 Cost Accounting 106
  • Notes 146
  • Chapter 5 Classical Optimization 148
  • Chapter 5 Classical Optimization 148
  • Notes 190
  • Chapter 6 Network Analysis 191
  • Notes 213
  • Chapter 7 Mathematical Programming 215
  • Notes 251
  • Chapter 8 - Games and Decisions 253
  • Notes 279
  • Chapter 9 Multicriteria Analysis 281
  • Chapter 9 Multicriteria Analysis 281
  • Notes 305
  • Chapter 10 Productivity Measurement 346
  • Chapter 11 Quality Control 348
  • Notes 373
  • Chapter 12 Besides Cost and Optimization 375
  • Notes 381
  • Bibliography 383
  • Index 389
  • About the Author 395
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