PRODUCTIVIT

y
 PRODUCTIVIT
outputs.
y
• A measure of how efficiently inputs are being converted into

• Productivity is the value of outputs (services and products)

produced divided by the values of input resources (wages,
cost of equipment, and so on) used.
The more efficiently a company uses its resources, the
more productive it is:
Productivity = output
input
 Measures of Productivity
1. Single-factor productivity - (Partial productivity) -
Productivity computed as a ratio of output to only one
input (e.g., labor, materials, machines).
Following are two examples of the calculation of partial productivity:
a. A bakery oven produces 345 pastries in 4 hours. What is its
Productivity per hour?

Machine productivity = number of pastries/oven time

= 345 pastries / 4 hours
= 86.25 pastries/hour

b. Two workers paint tables in a furniture shop. If the workers paint 30

tables in 7 hours, what is their productivity?

Labor productivity = 30 tables / 2 workers’ / 7 hours

= 2.14 tables/hour
 Measures of Productivity
2. Multifactor productivity relates output to a combination of
inputs, such as (labor + capital) or (labor + capital + energy +
materials).
• is an index of the output provided by more than one of the
resources used in production; it may be the value of the output
divided by the sum of labor, materials, and overhead costs.
For example, let’s say that output is worth $382 and labor and
materials costs are $168 and $98, respectively. A multifactor
productivity measure of our use of labor and materials would
be:
Multifactor productivity = output / labor + materials
= 382 / 168 + 98
= 1.436 output per dollar
 Measures of Productivity
3. Total factor productivity compares the total quantity of
goods and services produced with all the inputs used to produce
them.
• Productivity computed as a ratio of output to all
organizational inputs.
For example, let’s say that the weekly dollar value of a
company’s output, such as finished goods and work in
progress, is $10,200 and that the value of its inputs, such as
labor, materials, and capital, is $8600. The company’s total
weekly productivity would be computed as follows:

Total productivity = output / input

= $10,200 / $8600
= $ 1.186
Examples of Productivity Measures
 Interpreting Productivity Measures
 For example, if one worker at a pizza shop produces 17 pizzas
in two hours, the productivity of that worker is 8.5 pizzas per
hour.
 This number by itself does not tell us very much. However, if
we compare it to the productivity of two other workers, one
who produces 7.2 pizzas per hour and another 6.8 pizzas per
hour, it is much more meaningful. We can see that the first
worker is much more productive than the other two workers.
 Productivity and Competitiveness
 Productivity is essentially a scorecard of how efficiently
resources are used and a measure of competitiveness.

 Productivity can be measured for individuals, departments, or

organizations.

 Competitiveness - the degree to which a nation can

produce goods and services that meet the test of international
markets.
Competition within Industries
Increases when:
Measures of Competitiveness
(among different nations)
 Competitive Capabilities - are the cost, quality, time, and
flexibility dimensions that a process or supply chain actually
possesses and is able to deliver.

nine broad competitive priorities that fall into the four

capability groups:
• Low-cost Operations
• Consistent Quality
• Delivery Speed
• Volume Flexibility
Definitions, process considerations, and examples of competitive
priorities;
Definitions, process considerations, and examples of competitive
priorities;
Definitions, process considerations, and examples of competitive
priorities;
 Productivity and the Service Sector
 Service sector companies have a unique challenge
when trying to measure productivity.

 Services primarily produce intangible products, such

as ideas and information, making it difficult to evaluate
quality.

 Consequently, accurately measuring

productivity improvements can be difficult.
End of the Slide

Thank you and God Bless