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Efficient Production Based on Information and It


Efficient Production Based on Information and It s Economic Analysis Dr. Wang Jian Professor in Economics & Trade Agricultural University of Hebei – PowerPoint PPT presentation

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Title: Efficient Production Based on Information and It

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
  • 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
  • (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
  • Uncertainty is different from not-knowing or

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
  • Gaining information has the condition generally.
    By means of the condition, the information
    entropy will be smaller than unconditionally
  • This article research is based on the information
    scarcity, choice, existence relations and system
    conditions to make economic analysis.

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

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.

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.

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
  • (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

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

  • 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

  • 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
  • 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.

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