Definition of Productivity

Productivity: Definition

Productivity is the relationship between the

outputs generated from a system and the
inputs that are used to create those
outputs. Mathematically

O
P =
I
 Systems Concept

inputs outputs
transformations Customers
Land Goods
people SYSTEM and
capital services
facilities
equipment
tools O
energy I
materials
information productivity
Other Measures Affecting
Productivity

 Efficiency

 Effectiveness

 Quality

 Quality of Work Life

 Innovation
 Efficiency

 Measures the resources expected to be

consumed to the resources actually
consumed.
 Hence, it focuses on the input side of the
system. (To what degree did the system
utilize the “right” things.)
 Effectiveness

 Measures what the system sets out to

accomplish (objective) with what was
actually accomplished; plan vs. actual
 Hence, effectiveness is an output measure.
(Is the output “right” - right quality, right
quantity, on time, etc.)
 Quality

 Degree to which the outputs (products and

services) from the system conform to
requirements or meet customer
expectations.
 The focus is on quality attributes (e.g.,
conformance, performance, convenience,
responsiveness, perceived quality.)
 Quality of Work Life (QWL)

 Measures the way that employees in a

system respond to the sociotechnical
aspects of that system.
 Innovation

 Measures the applied creativity of the

system.
 Relates to the design and development of
improved products, services, and
processes.
 Productivity
Units produced
Productivity =
Input used

 Measure of process improvement

 Represents output relative to input
 Only through productivity increases
can our standard of living improve
 Productivity
Calculations

Labor Productivity
Units produced
Productivity =
Labor-hours used

1,000
= = 4 units/labor-hour
250

One resource input  single-factor productivity

Problem Solving on
Labor Productivity
Labor productivity
Determine the productivity for these cases:

Single factor productivity

1. Four workers installed 720 square yards of carpeting in eight
hours
2.A machine produced 68 usable pieces in two hours
3.A company that processes fruits and vegetables is able to
produce 400 cases of canned peaches in one-half hour with four
workers. What is labor productivity?
4.If Quality Coils pays $70 per day with 60 units produced per day
in Connecticut, it will spend less on labor than a Mexican plant that
pays $25 per day with production of 20 units per day.
Multifactor productivity
Determine the multifactor productivity for the combined input of labor and
machine time:
1.Given:
Output : 7,040 units
Input
Labor: $ 1,000
Materials: $ 520
Overhead: $ 2,000

Multifactor productivity = Output _____

Labor + Materials + Overhead

2. A wrapping-paper produced 200 rolls of paper one day. Standard price is

$ 1/roll. Labor cost was $160, material coat was $50, and overhead was
$320. Determine the mutifactor productivity.