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The long-run labor demand function of a competitive firm is determined by the following profit maximization problem: ,, = (,), where p is the exogenous selling price of the produced output, Q is the chosen quantity of output to be produced per month, w is the hourly wage rate paid to a worker, L is the number of labor hours hired (the quantity of labor demanded) per month, r is the cost of ...
A conditional factor demand function expresses the conditional factor demand as a function of the output level and the input costs. [1] The conditional portion of this phrase refers to the fact that this function is conditional on a given level of output, so output is one argument of the function.
For instance, when the sales department records a sale, the forecast demand may be automatically shifted to meet the new demand. Inputs may also be inputted manually from forecasts that have also been calculated manually. Outputs may include amounts to be produced, staffing levels, quantity available to promise, and projected available balance.
Labour demand is a derived demand; that is, hiring labour is not desired for its own sake but rather because it aids in producing output, which contributes to an employer's revenue and hence profits. The demand for an additional amount of labour depends on the Marginal Revenue Product (MRP) and the marginal cost (MC) of the worker.
To satisfy the demand for period 1, 2, 3 Producing lot 1, 2 and 3 in one setup give us an average cost: C ( 3 ) = K + h r 2 + 2 h r 3 3 {\displaystyle C(3)={\frac {K+hr_{2}+2hr_{3}}{3}}} The average cost =( the setup cost + the inventory holding cost of the lot required in period 2+ the inventory holding cost of the lot required in period 3 ...
The marginal revenue function is the first derivative of the total revenue function or MR = 120 - Q. Note that in this linear example the MR function has the same y-intercept as the inverse demand function, the x-intercept of the MR function is one-half the value of the demand function, and the slope of the MR function is twice that of the ...
In addition, for level comparisons of labor productivity, the output needs to be converted into a common currency. The preferred conversion factors are Purchasing Power Parities , but their accuracy can be negatively influenced by the limited representativeness of the goods and services compared and different aggregation methods. [ 7 ]
We have available a forecast of product demand d t over a relevant time horizon t=1,2,...,N (for example we might know how many widgets will be needed each week for the next 52 weeks). There is a setup cost s t incurred for each order and there is an inventory holding cost i t per item per period ( s t and i t can also vary with time if desired).