Efficient Production Based on Information and It

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Efficient Production Based on Information and
Its Economic Analysis

• Dr. Wang Jian

Professor in Economics Trade Agricultural
University of Hebei Baoding, Hebei P. R. China
071000
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1.Introduction

• The Important Concepts
• (1) Word Information
• C. E. Shannon (1948) as the founder of
  information theory first gave a definition on
  information entropy, he pointed "Quantities of
  the form H-?pilogpi play a central role in
  information theory as measures of information,
  choice and uncertainty.
• Over 50 years, this conception in many of
  scientific areas, such as communication, nature,
  economy and management have obtained great
  achievements. K. J. Arrow (1988) based on this
  definition said Uncertainty has economic costs,
  therefore, uncertainty reducing is a kind of
  revenue.
• (2) Reducing uncertainty
• It is the origin of social civilization and
  people information demand.
• Uncertainty refers to the event to appear some
  kind of consequence under some kind of condition,
  and the probability can not be reliably
  quantitative.
• Uncertainty is different from not-knowing or
  ignorance.

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The Information Related to Economy and Management

• (3)Information scarcity
• If information can take as a kind of objective
  existence, that it will be the economic research
  beginning and the home to return to.
• Based on information relative scarcity, in the
  information economic research has three kind of
  situations namely information incompletely,
  information asymmetry and information ability
  difference.
• Gaining information has the condition generally.
  By means of the condition, the information
  entropy will be smaller than unconditionally
  cases.
• This article research is based on the information
  scarcity, choice, existence relations and system
  conditions to make economic analysis.

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2. Information Increase production Efficiently

• The production is an inputs-output production
  process in the opening system. It is an
  artificial intervened system, where the material,
  the energy and the information are all the
  orderly input factors.
• Definition 1 Supposes I?RI is the system
  information input set M(I) ? RM is the system
  material input set E(I) ? RE in the system is
  the energy input set Those material and energy
  inputs many also concerns with producer's
  technical knowledge. Y ? RK is the useful product
  of the system produced. So the above inputs set
  (M, E, I) is called a space of the system input
  factors .
• Definition 2 Among the variables there is a
  functional relationship, supposes
• M(I),E(I),I? D?R3 ,if there is a f
• f D?R.
• Then we have

.
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Definition 3

• Defined is a function Y?Y,-M(I),-E(I),-I
  . Among them, D is the space that constituted by
  the input factors R describes the system
  possible output f reveals the transformed
  function that orderly related between the input
  and output. This functional relation may be also
  written as
• In the formula, Y is systematic output M is the
  material input E is the energy input I?K is the
  systematic induced information. K indicates the
  system performance parameters.
• In the system, the efficient production
  significance lies in, when we cannot find any
  Y?Y, make Y?Y, that explains output Y is
  efficient. This meant, the similar input cannot
  produce more products, and same output cannot
  obtain by less input. In particular, if Iilt Ij,
  there are i, j to have M(Ii) ? (M(Ij) and E(Ii) ?
  (E(Ij), make Y(ki)ltY(kj), then the system is in a
  high efficient and high organized situation.

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The Key Roles of Information in the System

• How many output as well as the product quality
  relies on the system information input change.
  Such as,
• Thus, we can obtain a production function on
  information Yf(I), as well as a production
  inverse function, namely information demand
  function Ig(Y).
• Information generally has some new economic
  characteristics, such as incompleteness,
  uncertainty, as well as asymmetrical and so on.
  The production instability and the existence of
  risk must sum up as the information incomplete,
  uncertainty or asymmetry.
• (1)The systems output and the quality increase,
  the organization and order strengthen, those are
  all decided by the information growth.
• (2)The information growth achieved optimal
  economic effect, is decided by three essential
  aspects information quantity increasing,
  information existence relations changing and
  information functioning condition.
• (3) Information is playing the role of negative
  entropy in system.

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3.Information Demand Analysis

• If a user rely on the quantity of the information
  demand to realize his efficient output, let
  Iig(Yi), i1,2,, n. Supposes, the numerous is
  ordinary information users, web-people's
  information demands have some tendency
  approximately with the same economical
  characteristics.
• (1) Information service quantity expressed by Ii.
  
• (2) Information user expense indicated by ci(Ii).
  
• (3) Information service system expending function
  expressed by
• e ( ).
• A profit function can br written as

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Maximum benefit of the information service system

• Let Max p(I), then we can obtain
• If there is
• Defined a demand elasticity of user i
• Then
• Finally

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Outcomes

• According to formula (4), if
  ,
• which similarly regarding user j, it is showing
  user's information demand all is rich elastic.
• Formula (5) indicated, if the information demand
  elasticity of user i is bigger than that of user
  j, means( ), thus, user j will pay higher
  cost than that of user I, namely(ciltcj).
• It indicates that both information payment
  expense of the users and the elasticity of
  information demand are used in reverse
  proportionally.

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Enlightenment

• To advance the level of informationization and
  satisfy information demand growing day by day, in
  non prefect competition information market, to
  expand the information demand scale, enhance the
  elasticity of demand, by means of small profits
  but quick turnover can increase the service
  income.
• The information technology in advance enables the
  information market supplies to have the very
  strong potential, however the key is, any
  information service system should treat each user
  earnestly, improves their information service in
  the level and the quality, they can obtain the
  well benefit.
• Cultivate the market by the information service
  scale and creditworthiness, so that only the
  information service be possible to a close zero
  cost make users well off.

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Economics and Trade College Agricultural
University of Hebei Baoding, Hebei P. R. China
071000