THE ESTIMATION OF PRODUCTION FUNCTIONS FOR SMALL-SCALE FOOD INDUSTRIES

Transcription

1 Journal of Business Management and Research (JBMR) ISSN Vol.2, Issue 1, Sep TJPRC Pvt. Ltd., THE ESTIMATION OF PRODUCTION FUNCTIONS FOR SMALL-SCALE FOOD INDUSTRIES SEYED MOHAMMAD SHAHROUDI Faculty of industrial Engineering and Management, Shahrood University of Technology,Shahrood, Iran ABSTRACT This study aims to devise a model for planning rural development and agriculture by introducing and developing small-scale food industries. To determine which industries to introduce and on which industries to invest on in rural areas to increase employment and return the agricultural valueadded to such areas, the researcher attempts to identify the characteristics of such industry and find out the share of production and employment and income to investment. To achieve this goal, therefore, a production function for food industry is estimated. The present research tries to estimate the production function of agricultural industries in rural areas of Iran based on the mathematical model of Cobb- Douglas production function. KEYWORDS: small-scale food industries, production functions, development, productivity, marketing INTRODUCTION Food industries in rural areas is bond between agricultural and industry that become more important by considering agricultural in rural as a notable point. Agricultural development in big -scale is in impossible without industry. for example "cultivation and industry " is a sample that agricultures develop beside industry. Types of agricultural productions include that : Cultivated (georgic) productions, arboreal (planted with trees ) production, animal production, forest productions, conversion productions. For example, while the amount of apple increase the compote plant can establish. Indeed this is a kind of conversion industry that value added of conversion the apple production to compote return to that same rural. Also with adding materials to additional bran can produce birds food (grain). Food industries that often are self automatic and small scale created during long years from interior of rural and beside of agriculture help to the income and rural employment.

2 22 Seyed Mohammad Shahroudi Food industries development in rural cause to develop the agriculture, therefore, to industrialize the rural is necessary where in villager beside performing agricultural activity in their free time attract to these industries and they attempt for growing and developing the agriculture. Therefore, million employment chance create in rural so, in order to reach this aim, production function of food (agricultural) industries must estimate and by estimation we can determine what sum (amount ) investment on which of food industries, how number employment and how much income and how much / many production obtain via this process. So that, establishment and development of food industries is solution this research that base performed examination model that selected for this research (investigation) is mathematical cob Douglas production analysis. (y=al α k 3 ) because this function is economical function and using this function in economic Method and Research Manner Statistical association of this investigation include that small scale agricultural (food) industries of country and statistic years are considered from (Iran statistic lenter1981)that statistic by Iran statistic center. Statistic process performed all over and it involve all small scale food industries. manner of gathering data is by way of questionnaire. collecting (gathering) or classifying the statistical data of small scale food industries perfumed base on documents of Iran statistic center and making research model performed by researcher. Research hypothesis include that, estimation of agricultural industries production function base on cob Douglas production function. Characteristic of cob-douglas production function include that : 1. This function is common function that have spread use. 2.In many statistical examination use cob Douglas production function in relation between production rate and the amount of profusion in industry. 4. Cob- Douglas function is function that showing the economic production because the cob Douglas function curve slope is negative.that is it perform in economic area and second production area (Mohammad reza arsalan 1366 ) and also uneconomic area is meaningless for it. 5. In this function, α, β consider as ultimate output (yield ) of investment and job. Notice that function have properties of homogeneous liner function and also this function is first order. 6. In this function the development direction of locus points of minimum cost is consider for different values.

3 The Estimation of Production Functions for Small-Scale Food Industries 23 This direction in general state is curve shape. so that we can obtain minimum costs. 7. cob Douglas equation is a kind of substitution equation. one of the production factors use instead of other production factor in first substitution equation. That is, in production stages if amount of production factors (elements ) decreased and other production factors existed abundantly, in this case, using production factors that available abundantly in stead of production factors that are less. 8. this function have properties that use it in economic plantings. with α, β estimation can exam in α + β by economical evaluation manner that it can determine output. and we can use it in economic planning. 9. this function use in different countries, also base on performed examination, we can say that mentioned function use in industries of different country. 10. MPPL ( worker efficiency ) final efficiency and MPPK investment efficiency can obtain by function of production factors rate. In this study use cob Douglas model (y=al α k A ), also by using the SPSS 16 software and from non linear REY rosin analysis instruction above model processing base on exit data and model coefficients are calculate. Briefly, economic explanation of mathematical production function and discussion about it is as fallowing : Is as fallowing : A. if α + β > /, output regard to scale is ascending means that if worker and investment become double, production increase more than twice (double). B. If α + β = 1, output regard to scale is constant that is, if worker and investment become double (twice ) production will be double. C. if α + β < /, output regard to scale is descending that is, if worker and investment become double, production will be less than double. D. as much as A increace the used technology in production have more development and it become better. Statistical Examination Statistical examination purpose include that recognition the small scale industries structures in order analyzing the small scale industrials production function for proving the research hypothesis base on this subject that how amount of production factors mixed with each other until rate of observed

4 24 Seyed Mohammad Shahroudi production with obtain model create the different combination of labor force and production institutions that they are necessary for production planning in industry. In this discussion base on statistical data the small scale food industries are considered, also regression model and suitable mathematical production equation make for small industries. For this reason after obtaining mathematical production equation we determine which one of these equations valuable in different industrials and we select the best production function. And in result we decide which industry place in rural that established most employment chance and income in rural. CONCLUSIONS The result of statistical processing with Cobb-DOUGLAS model obtained by both statistical manner of production value and efficiency value for small-scale food industry in country In comparison both obtained model by two manner, note that above table data are suitable in both model because from process point view of exam moder, ANOVA table show meaningful and also it contain the best determination coefficient of R2 (CLOSE TO 1). Cob Douglas function obtained is as following : 1. in all small scale food industry equation of cob-douglas function (base on production value ) is that : α + β 1 0/ 003 0/ 003 l y = 1/ 918 k 2. in all small scale food industry equation of cob-douglas function (base on efficiency value ) is that : 1/= k α + β 1 Secondly, the result that obtained form processing the cob-douglas equations in small scale industries is that development of small industries in rural area cause to increase productions and employment in rural and this index have economization aspect. Also between investment on labor force and income exist important relation and increase the employment chance. REFERENCES 1. Chonk yoki, chief of small job federation of Korea in international conference of small job in Spain, general admonition of small scale industry in Tehran, in 2007 (page 114). 2. Rodovy, translation of rural industries committee, small scale developing industries in India, construction jihad (movement )in 1985, page Hamid sedighi, translation of mehdi khodaparast, economic modeling, commercial publisher company, in 1997, page mahdi taleb, ceminar of establishment industry in rural in 1983(page 80 )

5 The Estimation of Production Functions for Small-Scale Food Industries Ahmad korse, translation of mahomd tajdar, mathematical economic, Iran bank sciences institute in 1971 page Minze Deivid, translation of abbas Arab mazar, applications in economic evaluation, shahid behshti university in 1986 page 71, 72 7.Iran statistical center (1985), definitions and concepts that used in iran statistical center.