Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

deepening or widening the channel, providing new or larger locks. In
order to know how such changes in the operating environment affect the
cost of shipping by barge, it is necessary to have a detailed cost-
estimating procedure. However, changes in transportation costs on the
waterway do not take place in a vacuum; there are repercussions on
competing modes, most notably rail. Thus it is desirable to be able
to estimate the cost of rail transportation as well as that of inland
waterway transportation. It was with these goals in mind that the
research in this dissertation was undertaken.
Production and Process Functions. 1 In economic theory a produc-
tion function is defined as a relationship between inputs and outputs.
The production function states the maximum output obtainable from
every possible input combination. Inputs are usually defined as any
good or service which contributes to the production of an output. The
terms lazd. and service may be defined broadly to include other than
economic goods and may be either stocks or flows. Inputs are usually
thought of as either fixed or variable for a given period of production;
however, they may be fixed for one period of time or variable for a
longer period. Production functions are defined only for non-negative
values of the inputs and outputs.
The most general production function would be a long-run relation-
ship between inputs and output in which all inputs are variable. Short-
ran production functions could be obtained from the long-run functions
by assigning fixed levels to some of the inputs and permitting the others
to vary. One might even define various "intermediate" runs depending on
which sets of inputs are held constant.
2