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Efficiency is a level of performance that

describes a process that

uses the lowest amount of inputs

to create the greatest amount of inputs.

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Efficiency also can be stated as the
act of being
adequate in performance
with a minimum of
waste, effort, time.

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Time , money , raw material
are limited.

So it makes sense to try to conserve them.

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improving
productivity
procurement
processes
working
practices

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Economic efficiency refers to the use of
resources so as to maximize the production of
goods and services.

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A situation can be called economically efficient if :

No one can be made better off without making


someone else worse off.

No additional output can be obtained without


increasing the amount of inputs.

Production proceeds at the lowest possible per-


unit cost.

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Productive efficiency,
also known as technical efficiency,
occurs when the economy is utilizing all of its
resources efficiently,
producing most output
from least input.

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An example PPF:
Points B, C and D
are all productively efficient,
but an economy at A
would not be.

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Financial market efficiency refers to in financial
markets is the efficiency of allocating resources.
This includes producing the right goods for
the right people at the right price.

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There are three levels of There are four market
market efficiency. efficiency types.

These are: These are:

Weak-form efficiency Information arbitrage


efficiency
Semi-strong efficiency Fundamental valuation
efficiency
Full insurance efficiency
Strong-form efficiency
Functional/Operational
efficiency

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Allocative efficiency is a measure of
the benefit or utility derived from
a proposed or actual choice in
the distribution or apportionment of
resources.

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Distributive efficiency occurs when goods and
services are received by those who have the
greatest need for them.

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Dynamic efficiency refers to an economy that
appropriately balances short run concerns with
concerns in the long run.

Dynamic efficiency also refers to the ability to


adapt to changed economic conditions at low cost
quickly.

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Technical efficiency is the effectiveness with
which a given set of inputs is used to produce
an output.

When technical-efficiency is not being achieved


due to a lack of competetive pressure,
X-inefficiency occurs.

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The efficiency of a process is calculated
by dividing
the output by the input,
and then multiplying
the result by 100.

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Efficiency is usually given as a percentage and
can be computed with the following formula:

Efficiency = Work Output / Work Input (1)

Efficiency rating x 100=Percentage efficiency rating (2)

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Train the workforce

Improve motivation

More capital equipment

Use better quality raw materials

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Training the workforce
increases improvements in
the workers productivity levels.

Training should enable workers to work more


quickly and more accurately and to produce
better quality products.

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A better-motivated workforce
will work harder
and take pride in their work.

There are many different financial (e.g. bonuses)


and non-financial ways (e.g. empowerment)
for businesses to motivate their workers.

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Investment into new, higher technological
machinery can have number of advantages:
Longer hours can be worked.
Machine can perform repetitive
and complicated tasks more
quickly.
Accuracy incerases and therefore
wastage can be less.
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This can reduce the amount of time wasted on
rejected or defective products.

A business should ensure they find the supplier


who can supply the best quality resources,
but at a competitive price and also with reliable
delivery.

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Efficiency and effectiveness were originally
industrial engineering concepts that came of age
in
the early twentieth century.

Effectiveness is
doing the right thing .
Efficiency is
doing the thing right.
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Efficiency alone will put your company on the
fast track to bankruptcy.
Effectiveness (efficiacy) alone *may* allow your
company to survive.
However the company will not reach its
maximum potantial if it is inefficient.

Effectiveness and Efficiency together


will almost
guarantee success!

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THANK YOU
FOR
YOUR
LISTENING!
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