1. ## Economic Calculation

Hello!

I have a question about how economic calculation is carried out within the RBE model. I have read a little about this but I can't get my head round how it would be done. I am hoping that someone here might be able to talk me through it step-by-step.

So let's take an example of a production process, say the production of an automobile. Let's say you have two potential methods of producing an automobile - Method A and Method B - for which the production functions are known.

Method A requires C tonnes of steel, D hours of machine time, E hours of unskilled labor, F hours of engineering labor, G square feet of factory space, H kilowatt hours of electricity and J hours of managerial labor. All these inputs can be combined to produce 1 automobile.

Method B requires P tonnes of steel, Q hours of machine time, R hours of unskilled labor, S hours of engineering labor, T square feet of factory space, U kilowatt hours of electricity and V hours of managerial labor. All these inputs can be combined to produce 1 automobile.

The question is: which method of production is more efficient? Which method represents the better use of resources? Can someone explain to me how the individuals responsible for the production of automobiles would go about assessing which method represents the better use of resources?

Thanks,
Graham

2. I would imagine, the most efficient is the one that requires the 'least' amount of material resources.

3. Originally Posted by Peter Jolliffe
I would imagine, the most efficient is the one that requires the 'least' amount of material resources.
How would you work out which method uses the least amount of resources?

4. Originally Posted by GrahamW
How would you work out which method uses the least amount of resources?
You put that in the formula yourself ..ie method A requires c tons of steel ..Method B requires P tons of steel....and so on.... so if Method A requires one ton......and Method B requires 2 tons..then method A is the better choice. The way to work it out would obviously be a little bit more complicated, probably with 'weighted' values given to certain resources....but it still seems like it would be fairly straightforward to me.

5. Originally Posted by Peter Jolliffe
You put that in the formula yourself ..ie method A requires c tons of steel ..Method B requires P tons of steel....and so on.... so if Method A requires one ton......and Method B requires 2 tons..then method A is the better choice. The way to work it out would obviously be a little bit more complicated, probably with 'weighted' values given to certain resources....but it still seems like it would be fairly straightforward to me.
How would you come up with the weighting values?

6. Originally Posted by GrahamW
How would you come up with the weighting values?
Well every material resource could be assigned a numerical value based on things like it's availability and renew-ability. I am sure it would all get more complex with things like alternatives and environmental effects being taken into account for calculating that numerical value and you would also have priority values given to the use of material resources as well but at the end of the day it doesn't matter how complex it gets, the basic principle for how we arrive at the best decision would be based only on 'reality' and what is best for us as a whole and not for any individual or group.

7. There are a few scientific material/process selection methods used in engineering today that make it possible to delegate most of this otherwise lengthy and complex hand-calculation to a computer. Here is a freely available example.

Usually it'll go something like this:
1. Define requirements and quantify them
2. Screen out unacceptable options
For example, a seat can't break with one human's weight on it, a drinks container can't be water-permeable or leach toxins, windows can't be opaque, a kettle can't be made out of chocolate... above and beyond basic functionality, properties are then optimised to give the best safety margins and performance possible.
3. Define weighting for optimal properties
A method often used for this is called "the digital logic method", where properties are repeatedly matched off against each other in pairs, somewhat like a tournament only better because all combinations are considered, and weighting factor is determined based upon tallying up points from each comparison. When a part being made is safety-critical, such as a bridge or a high-pressure tank, properties like strength, stiffness, corrosion resistance, etc. will come out taking precedent. Other applications may produce quite different requirements, like heat and sound insulation for wall materials, flexibility and 'breathability' (air permeability) for clothing materials.
4. Find an optimal solution
Once performance of these requirements is all counted up for comparison, there may be one or more shining superior options, for example certain steels or aluminium-titanium alloys for a vehicle chassis.

After that point the benefits of a cooperative global resource management system show up, as this process is repeated at a higher order, which isn't usually possible amongst manufacturing corporations and nations that are in competition with each other. By this I mean we look again at a few optimum materials that have been proposed each for cars, trains, spacecraft, or even humble shelves, and work out how best to distribute resources between applications and regions.
This might turn up a solution for example where the greatest overall energy saving is made by using lightweight alloys everywhere in spacecraft, and some mixture of them in cars and trains, while shelves would almost certainly be steel, unless they were specified to support something lightweight in which case they could even be made from wood or hemp composite provided there is no significant fire hazard where they are placed.
There may even be regional differences in materials used, for example if potential performance benefits are marginal between two materials and one is easily available in a local scrapyard, landfill or mineral deposit, then that easily available material could be used first.
It is likely that in this higher order, without basing individual choices heavily upon abstract 'monetary cost', a balance of energy saving could be found by using easily renewable materials such as hemp-bioplastic composites in small electronic device cases where maximising their strength/weight performance could become absurd.

8. Originally Posted by Peter Jolliffe
Well every material resource could be assigned a numerical value based on things like it's availability and renew-ability. I am sure it would all get more complex with things like alternatives and environmental effects being taken into account for calculating that numerical value and you would also have priority values given to the use of material resources as well but at the end of the day it doesn't matter how complex it gets, the basic principle for how we arrive at the best decision would be based only on 'reality' and what is best for us as a whole and not for any individual or group.
How do you assess the relative importance of the attributes (availability, renewability, environmental effects, etc) that feed into the weightings?

9. Originally Posted by 4ndy
There are a few scientific material/process selection methods used in engineering today that make it possible to delegate most of this otherwise lengthy and complex hand-calculation to a computer. Here is a freely available example
Thanks for that. My question though isn't really about how engineers select the optimum resources, it is about how decision-makers select the optimal production process overall.

So in my example, let C=1, P=1.2, D=20, and Q=10. In other words, Method B uses 20% more steel than Method A, but Method A uses 100% more machine-time than Method B. How do you assess whether it's better to opt for the more 'steel-efficient' method or the more 'machine-time-efficient' method?

10. Originally Posted by GrahamW
Thanks for that. My question though isn't really about how engineers select the optimum resources, it is about how decision-makers select the optimal production process overall.

So in my example, let C=1, P=1.2, D=20, and Q=10. In other words, Method B uses 20% more steel than Method A, but Method A uses 100% more machine-time than Method B. How do you assess whether it's better to opt for the more 'steel-efficient' method or the more 'machine-time-efficient' method?
4ndy is way more qualified than I am to give you a decent answer Graham and but I would think your example will depend on what 'importance' is given to the variables such as machine time as opposed to qty of steel ..all these things could be turned into numbers and mathematically factored into the computers algorithms and the computer will give you the optimal decision based on all the relevant data. In reality it won't be humans making the decisions, It will be humans asking the questions, and computers providing them with answers............of course humans would always have the option of deciding to ignore the computers answers and go their own way but what would be the point of that ? ...Although I confess I do sometimes ignore my sat nav and she never gets mad she just recalculates a new route to my destination.

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