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Productivity

The document discusses productivity, including definitions and measures. Productivity is a ratio of output to inputs used. It can be measured partially based on single inputs like labor or capital, or multifactor based on multiple inputs. Factors that affect productivity include capital, technology, management quality, and others. Productivity improvements involve developing measures, identifying bottlenecks, setting goals, and measuring results.

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Saidul Said
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25 views13 pages

Productivity

The document discusses productivity, including definitions and measures. Productivity is a ratio of output to inputs used. It can be measured partially based on single inputs like labor or capital, or multifactor based on multiple inputs. Factors that affect productivity include capital, technology, management quality, and others. Productivity improvements involve developing measures, identifying bottlenecks, setting goals, and measuring results.

Uploaded by

Saidul Said
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Productivity

 Productivity
 A measure of the effective use of resources,
usually expressed as the ratio of output to
input
 Productivity ratios are used for
 Planning workforce requirements
 Scheduling equipment
 Financial analysis

2-1
Productivity

 Partial measures
 output/(single input)
 Multi-factor measures
 output/(multiple inputs)
 Total measure
 output/(total inputs)
Outputs
Productivity =
Inputs

2-2
Productivity Growth

Productivity Growth =
Current Period Productivity – Previous Period Productivity
Previous Period Productivity

2-3
Measures of Productivity

Partial Output Output Output Output


measures Labor Machine Capital Energy

Multifactor Output Output


measures Labor + Machine Labor + Capital + Energy

Total Goods or Services Produced


measure All inputs used to produce them

2-4
Examples of Partial Productivity Measures

Labor Units of output per labor hour


Units of output per shift
Productivity Value-added per labor hour

Machine Units of output per machine hour


machine hour
Productivity
Capital Units of output per dollar input
Dollar value of output per dollar input
Productivity
Energy Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Productivity
2-5
Example 3

7040 Units Produced

Cost of labor of $1,000

Cost of materials: $520

Cost of overhead: $2000

What is the multifactor productivity?


Ans. 2.0 units per dollar of input
2-6
Example 3 Solution

MFP = Output
Labor + Materials + Overhead

MFP = (7040 units)


$1000 + $520 + $2000

MFP = 2.0 units per dollar of input

2-7
Process Yield
 Process yield is the ratio of output of good
product to input
 Defective product is not included in the
output

 Service example:
 Ratio of cars rented to cars available to rent

2-8
Factors Affecting Productivity

Capital Quality

Technology Management

2-9
Other Factors Affecting Productivity

 Standardization
 Quality
 Use of Internet
 Computer viruses
 Searching for lost or misplaced items
 Scrap rates
 New workers

2-10
Other Factors Affecting Productivity

 Safety
 Shortage of IT workers
 Layoffs
 Labor turnover
 Design of the workspace
 Incentive plans that reward productivity

2-11
Outsourcing
 Higher productivity in another company is a
key reason organizations outsource work
 Improving productivity may reduce the need
for outsourcing

2-12
Improving Productivity

 Develop productivity measures


 Determine critical (bottleneck) operations
 Develop methods for productivity
improvements
 Establish reasonable goals
 Get management support
 Measure and publicize improvements
 Don’t confuse productivity with efficiency

2-13

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