Describe the inputs that are used in this company’s  production function and identify any challenges to securing these inputs.

Research and analysis for managerial decision-making

A company’s production function describes the way inputs are utilized to produce outputs. A manufacturing company might use labor, raw materials and machinery to create finished products for sale.

Due to their potential risks and high prices, raw materials are often the hardest input to source. These materials are often difficult to source because they have to meet strict quality standards. They also need to come from different locations. Companies must also ensure their suppliers comply with all safety regulations to avoid any liability from defective products.

While labor is an important input to many businesses it can pose problems if not enough is available or high turnover rates. This can result in lower output and higher prices. Machinery costs can vary depending on the type, and energy costs, such as electricity, fluctuate. Companies must therefore find cost-saving strategies to stay competitive. It is important to secure inputs and manage them well in order for business to succeed.

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