1. The Gemstone Example

In this chapter, a simple example is provided to explain several concepts which are important to measure the performance of a set of homogenous factories, organizations, firms and so on. No computer knowledge is needed in this chapter, but a very elementary knowledge of mathematics will be required, such as sketching a line in a plane. The section is started with a question about a jewelry company which would like to evaluate 17 candidates according to the results of a task. The concepts are logically discussed to pave the way to introduce different aspects of the company and to establish the corresponding mathematical foundation for further complex questions on measuring the performance of firms. Several figures are provided to elucidate the concepts. Of course, the provided concepts are not new and have been mentioned in the literature of Economics, Management, Engineering and Operations Research; however, in order to avoid any confusion, these concepts are re-introduced and the pros and cons of each concept are generally illustrated. At the end of this chapter, readers will have learned the elementary requirements and concepts of measuring the performance evaluation of firms.