Productivity Measurement Project

BUSN 368

Submitted to: Prof. Muhammad Salman Bilal

Submitted by:

Faiz Ali Ahmed Israr 20-10715

Umer Najeeb 19-11091
 Doce Multi Fruit Juice

Productivity Cycle (Measurement)

Scenario:
Doce wants to evaluate its labor and multifactor productivity with a new Juice filling machine of
their new product known as multi fruit Juice. The companies have 25 workers, 5 are for juice
extraction working on machines and 20 are for bottle packaging each working 8 hours per day
for a payroll cost 800 rupees/day each (20000 labor cost per day) and overhead expenses of
40000 rupees per day. With this labor, Doce is producing 1000 bottles per day, but with the
increase demand in Ramadan, they want to increase their production and make their work fast.
The new juice filling machine will allow the production of 1800 bottles per day. The other costs
are the same, the overhead expenses are now 60000 rupees which includes increased electricity
bill and machine operators pay in it. The labors with now work on packing the bottles into boxes
and bottle filling and cap applying will be done by the machine.

Total

Types of
Productivity
Total
Partial
Factor
SINGLE FACTOR PRODUCTIVITY = UNITS PRODUCED/LABOR-HOUR USED

Description Equation Result

Labor productivity with the 1000 bottles per day/200 5 bottles per labor hour
old system labor-hours
Labor productivity with new 1800 bottles per day/ 200 9 bottles per labor hour
system labor-hours

MULTI FACTOR PRODUCTIVITY =

OUTPUT/LABOR+MATERIAL+ENERGY+CAPITAL+MISCALLENEOUS

Description Equation Result

Multi-factor productivity with 1000 bottles per day/ 0.0167 bottles per rupees.
old system 20000+40000
Multi-factor productivity with 3500 bottles per day/ 0.0225 bottles per rupees.
new-system 20000+60000

⮚ Labor productivity has increased from 5 to 9. The change is (9 - 5) / 5 = 0.80, or a 80%

increase in labor productivity.

⮚ Multi factor productivity has increased from 0.0167 to 0.0225. The change is (0.0225 -
0.0167) / 0.0167 = 0.35, or a 35% increase in multifactor productivity.

PARTIAL FACTOR PRODUCTITVITY = OUTPUT / INPUT

Old System:
To calculate Partial Factor Productivity, the Doce company produces 120000/-PKR worth of
output and the daily value of all inputs (Expenses) are PRs 40000/-

Partial Factor Productivity

= Output / Input
= 120000 / 40000
 =3

New System:
To calculate Partial Factor Productivity, the Doce company now produces 216000/-PKR worth
of output and the daily value of all inputs (Expenses) are PRs 60000/-.

Partial Factor Productivity

= Output / Input
= 216000 / 60000
= 3.6

Sumanth's Total Productivity Model

Total productivity = Total Tangible output / Total Tangible input

Total Tangible Output = (value of finished units produced + value of partial units produced +
dividends from securities + interest from bonds + other income)

Total Tangible Input = Value of (human + material + capital + energy + other expenses) inputs
used.

Inputs
(Tangible)

Other
Human Capital Materials Energy
Expenses

Fixed Working Oil

Workers Raw Gas
Material 1 Taxes
Managers Electriciy Travel
Raw
Professionals Material 2 Coal General
Cash Administrati
Land
IInventories ve expenses
Plant
A/C
Machinary recievable
 Output
(Tangible)

Partial Dividends Intrest

Finished Other
units from from
units Income
finished security Bonds

For For
For Sale Internal For Sale Internal
Use use

Period 1= Old System

Period 2 = New System

Tangible Input
Human Input PKR (in PKR (in
thousands) thousands)
Period 1 Period 2
⮚ Workers 100 100

⮚ Professionals 500 500

⮚ Managers 350 350

Material Input
⮚ Raw Material 1 (Pulp) 2000 3000

⮚ Raw Material 2 (flavored water) 1800 2700

Fixed Capital Input

⮚ Land 600 600

⮚ Building and Structure 300 300

⮚ Machinery 800 800

Energy Input
⮚ Electricity 120 120

⮚ Gas 100 100

⮚ Water 20 20

Other Expenses
⮚ Travel 90 90

⮚ Taxes 25 25

⮚ Marketing 125 125

TOTAL 6930 8830

 Tangible Output
PKR (in PKR (in
thousands) thousands)
Period 1 Period 2
⮚ Value of Finished units completed 7000 12000

⮚ Value of partial finished units 2500 2000

completed

⮚ Dividends from Securities 750 750

⮚ Interest from bonds 1000 1000

⮚ Other Income 120 120

⮚ Total 11370 15870

Period 1 Period 2

Total productivity = Total Tangible output / Total productivity = Total Tangible output /
Total Tangible input Total Tangible input

Total productivity = 11370/ 6930 Total productivity = 15870/ 8830

Total productivity = 1.64 Total productivity = 1.797

 Doce Canned Mix Fruits
Scenario:
At Doce, fruits are processed to produce canned mix fruits. The company is able to produce 100
cases of canned fruits in 1 hour (800 per day) with 8 workers with their current equipment.
Each worker is working 8 hours per day and the total labor-hour for the productivity is 64
Hours. The company wants to upgrade their equipment so that they can increase their
production to 150 cases of canned fruits per hour (400 per day). The Labor hours will
increase by 16 hours per day.

⮚ Current Labor Productivity: Units produced / Labor-used

= 800 cases / 64 Labor-Hours

= 800/64
= 12.5 cases per labor hour.

⮚ Productivity with New Equipment:

= 1200 cases / 64 Labor-Hours + 16 Labor-Hours

= 1200/80
= 15 cases per Labor-Hour.

Doce is now viewing their productivity from a multi-factor perspective. The total labor-hours are
64 per day and will increase to 80 per day. Expenses with the old system were 22000 which
have increased to 30000. The company is paying 500 rupees/day to each labor.

Current System
Labor: 64 hours @ 500 = 32000
Expenses: 22000
Total Cost: 54000 PKR

Multi Factor Productivity of Current System:

= 800 / 54000 = 0.014 cases/Rupees

System with New Equipment

Labor: 80 hours @ 500 = 40000
Expenses: 30000
Total Cost: 70000 PKR
Multi Factor Productivity of proposed system:
= 1200 / 70000 = 0.017 cases/Rupees

0.017 - 0.014 / 0.014 = 0.21, or a 21% increase in multifactor productivity.