Relationship between Economics and Process Control

In the past, economics has little meaning to engineers since engineers create and build without thinking much about the cost and materials. However, time has change and we no longer have raw materials in abundance. With limited sources and costly materials, engineers have no choice but to consider the economics side of engineering.

One field where engineers have to monitor cost and profit is process control in the industry. In any industry, a process or multi-processes will always involve raw materials and supportive elements like labour hour, machine hour, and salary in order to produce a product. Raw materials and supportive elements are what we view as variables in process and these variables determine if the process is profiting, sustainable or not sustainable. To deduce values of the variables and to relate between input and output of a process, we use Cobb-Douglas Production Function.

Obtaining values of α, β and γ will enable us to do the next step, α+β+γ. This step will give us the following conditions:
• α+β+γ < 1, the return scale is decreasing
• α+β+γ > 1, the return scale is increasing
• α+β+γ = 1, the return scale is constant

To solve Cobb-Douglas Production Function, we can either use Microsoft Excel or SPSS software.