Comparative analysis of the optimal level of production capacity of the top factory industries in Iran

Subject Areas : Financial Economics

Mehran Hafizi Birgani ¹ , Alireza DagigiAsl ² , Mohammad Qoli Yousefi ³ , Timour Mohammadi ⁴

1 - Department of Economics, Suleiman Mosque Branch, Islamic Azad University, Suleiman Mosque, Iran
2 - Department of Economics and Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran
3 - Department of Economics, Faculty of Economics, AllamehTabatabai University, Tehran, Iran
4 - Department of Economics, Faculty of Economics, AllamehTabatabai University, Tehran, Iran.

Received: 2022-07-05 Accepted : 2022-09-07 Published : 2022-11-22

Keywords: C15, L52, Keywords: Production Capacity, Optimal Level, Cost Translog Function, Factory Industries, Iran. Classification: JEL: H26,

Abstract :

AbstractThe main purpose of this article is a comparative analysis of the optimal level of production capacity of the country's top factories. In this article, we compare five different industries that are leading industries in the field of production. These industries are: (chemical, base metals, petroleum products, gold and jewelry, stone), in order to determine the optimal level of production capacity in the top factory industries with the two-digit code ISIC.Rev.2 and ISIC.Rev.3 from The translog cost function was used. Production efficiency is the equivalence of scale traction or cost traction (inverse of scale traction) with one. To obtain the optimal level of production, first from the equation of scale elasticity or cost elasticity with one, a production level was obtained which naturally satisfies the first condition, then the second condition in production was obtained for research purposes. The results of comparative analysis of top industries showed that the production capacity in the chemical industry was the amount of optimal production capacity equal to 598647 million rials. The average real output value of each industrial enterprise in the chemical industry production sector is 57042.36 million rials per year, it seems that the production companies in this sector have produced more than their capacity. And have made the most of their optimal capacity. Capacity utilization here was estimated at 185%. The amount of optimal production capacity of petroleum products is equal to 34921.6 million rials. The average value of real output of each industrial enterprise in the production of petroleum products is 39821.51 million rials per year, it seems that the enterprises of this sector have used their capacity in a more efficient way. Capacity utilization was estimated at 164%. The actual production level of basic metals was 57421.2 million rials per year, which indicates the minimum point of minimization of the total average cost function. The average value of real output of each industrial enterprise in the production of basic metals is 61235.2 Rials per year. This indicates that companies in this group of industries in the country use about 33.7% of their nominal capacity. Which is much less than the optimal value is required. The nominal production capacity of the gold and jewelry industries is about 59%. Production capacity is increasing. The amount of optimal production capacity in this industry was equal to 57846.3 million Rials. The average value of the actual output of each industrial enterprise in the production of gold and jewelry industries is 65432.2 million Rials per year, it seems that manufacturing enterprises in this sector of their capacity They used it in a better way. Capacity utilization here was estimated at 174%. The nominal production capacity of the stone industry is about 41%. The amount of optimal production capacity in this industry was equal to 26741.4 million rials. The average value of real output of each industrial enterprise in the stone industry production sector is 31254.6 million rials per year, it seems that the manufacturing enterprises in this sector have not used their capacity in a more optimal way. Capacity utilization was estimated at 78% in the analysis.

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