Lesson 04

Work System Design

Productivity Measures

Dr. Inderdeep Singh

Department of Mechanical and Industrial Engineering

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 Productivity Measures

 Partial Productivity Measures (PPM)

 Total Productivity Measures (TPM)

 Total Factor Productivity Measures (TFP)

 Multi Factor Productivity (MFP)

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 Partial Productivity Measures (PPM)
Depending upon the individual input, partial productivity measures
are expressed as :
output
 Partial productivity =
Indidual input
output
 Labour productivity =
Labour input
output
 Capital productivity =
Capital input
output
 Material productivity =
Material input

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 Partial Productivity Measures (PPM)

• Energy productivity = Output / Energy input

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 Partial Productivity Measures(PPM)

 Major disadvantage of PPM is that, there is an over emphasis on

one input factor to the extent that other inputs are
underestimated.

 PPM cannot represent the overall productivity of the firm

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 Partial Productivity Measures: Examples
 Company X produces 5000 scooters in a shift employing 200 workers,
whereas company Y manufactures 9000 scooters employing 300 workers.
The partial productivity in relation to manpower of company Y is higher
compared to company X.

 X petroleum sells its petrol at Rs.30000 with the help of three pumps in an
area of 1000sq ft. whereas Y petroleum sells its petrol worth Rs.40000 with
the same parameters.

 Partial productivity in relation to space of Y petroleum is better than X

because of better layout and an appropriate entry and exit system.

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 Total Productivity Measures (TPM)
 Based on all the inputs.

 This model can be applied to any manufacturing organisation or

service company.

Total Tangible Output

 Total productivity =
Total Tangible Input

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 Total Productivity Measures (TPM)
 𝐓𝐨𝐭𝐚𝐥 𝐓𝐚𝐧𝐠𝐢𝐛𝐥𝐞 𝐎𝐮𝐭𝐩𝐮𝐭
= Value of finished goods produced + value of partial units produced + dividends
from securities + interest+ other income

 𝐓𝐨𝐭𝐚𝐥 𝐓𝐚𝐧𝐠𝐢𝐛𝐥𝐞 𝐈𝐧𝐩𝐮𝐭

= value of human + material +capital + energy + other inputs

Note: Tangible here refers to measurable

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 Features of TPM
 Gives both firm level and detailed unit level index.

 Helps to find out the performance and productivity of the

operational unit.

 Help to plan, evaluate and control.

 An important information to strategic planners regarding

expansion or phasing out decisions .
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 Total Factor Productivity Measures (TFP)
 Labour and capital are always considered important contributors
to the process of production.
 Data is easy to obtain in TFP
 It does not consider the impact of material and energy input, even
though materials constitute 60% of the cost.

Net output
 Total Factor Productivity =
Labour+Capital input

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 Total Factor Productivity Measures (TFP)
Example:
Production worth Rs 80 lakhs was manufactured and sold in a
month. It consumed labour hours worth Rs12 lakhs and capital
worth Rs 48 lakhs

Solution:
Net output 80
TFP = = = 1.33
Labour+Capital input 12+48

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 Multi Factor Productivity (MFP)
 MFP model considers labour, material and energy as major
inputs.
 Capital was left out since it is very difficult to estimate how
much capital is being consumed in a unit of time.

Net output
 MFP =
Inputs (labour + energy + material)

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 Advantages and Limitations of Productivity
Measures
Advantage Limitations
Partial productivity measures
1. Easy to understand and calculate 1. Misleading if used alone
2. A tool to pin-point improvement 2. No consideration of overall impact
Total productivity measures
1. Easy and more accurate representation 1. Difficulty in obtaining the data
of total picture of the company 2. Requirement of special data
2. Easily related to total cost collection system

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 Advantages and Limitations of Productivity
Measures
Advantage Limitations
Total factor productivity measures
1. Data from company records is 1. No consideration for material and
relatively easy to obtain. energy input
2. Value added approach 2. Difficulty to relate to the value
added approach

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