Methods and Work Measurement
LECTURE 3 :
MEASUREMENT MODEL OF PRODUCTIVITY
27 FEBRUARY 2009
Hanna Lestari, ST, M.Eng-FTI-UII @ 2009
Why do We Care About Productivity?
 Productivity is affected by efficiency, effectiveness,
and quality.
 Productivity, together with innovation and quality
of working life, determine the total organizational
performance – profitability
 Without productivity improvement, businesses do
not survive in a global economy.
 Higher productivity means higher standard of
living
Hanna Lestari, ST, M.Eng-FTI-UII
Total Organizational Performance
Efficiency
Innovation
Effectiveness
Quality
Hanna Lestari, ST, M.Eng-FTI-UII
Productivity
Quality of working life
Profitability
(organizational
Performance)
Productivity Measurement Techniques
Partial productivity : Output/single inputs
Multi-factors productivity: Output/multiple inputs
Total Productivity: Output/total inputs
Hanna Lestari, ST, M.Eng-FTI-UII
Partial Productivity
Labour
Productivity
• = Output/Labour
Material
Productivity
• = Output/Material
Machine
Productivity
• =Output/Machine
Hanna Lestari, ST, M.Eng-FTI-UII
Partial Productivity
Energy
Productivity
Etc…
• =Output/Energy
Contoh Soal:
Dalam sebulan PT. Noodle mampu memproduksi 10.000 units produk dengan
500 jam kerja, berapa produktivitas tenaga kerja perusahaan tsb?
Jawab:
10,000 units/500hrs = 20 units/hour
Hanna Lestari, ST, M.Eng-FTI-UII
Multi-factors Productivity
Multi-factors
productivity
Multi-factors
productivity
Multi-factors
productivity
Etc…
Hanna Lestari, ST, M.Eng-FTI-UII
• Output/(Labor + machine)
• Output/(Labor + machine+ material)
• Output/(Labor + energy+ material)
Case Study
Berikut ini adalah data output hasil produksi dan input yang
digunakan oleh PT. Noodle dalam satu periode waktu:
- Output : $ 5000
- Labor : $ 600
- Material: $ 800
- Energy : $ 500
- Capital : $ 400
- Other expense input : $ 500
berdasarkan data-data tersebut diatas maka rasio
produktivitas parsial dan total perusahaan tsb pada periode
dasar adalah:
Hanna Lestari, ST, M.Eng-FTI-UII
Answer : Partial Productivity
Labor Productivity
Material
Productivity
• = 5000/600= 8.33
• = 5000/800= 6.25
Energy Productivity
Capital Productivity
• = 5000/500= 10
• = 5000/400= 12.5
Other expense
productivity
Hanna Lestari, ST, M.Eng-FTI-UII
• = 5000/500= 10
Answer: Total Productivity
 Total Productivity :
= Total Output/ (labor + material + capital + energy +
other expense input)
= 5000 / (600+800+400+500+500)
= 5000/2800
= 1.785
Hanna Lestari, ST, M.Eng-FTI-UII
Measurement Model of Productivity
Objective Matrix
(OMAX)
• Model Craig Haris
• Marvin E Mundel
(1976)
American
Productivity
Center (APC)
Hanna Lestari, ST, M.Eng-FTI-UII
Objective Matrix (OMAX)
 OMAX
is a partial productivity measurement
developed for controlling productivity in the each
part of firm system based on criteria of
productivity.
 Developed
by James L. Riggs (Dept. of Industrial
Engineering at Oregon State University) in 1980.
Hanna Lestari, ST, M.Eng-FTI-UII
Objective Matrix (OMAX) Model
DEFINITION
BLOCK
QUANTIFICATION
BLOCK
WEIGHT AND
VALUE BLOCK
Objective Matrix (OMAX) Model
Pr oductivity criteria
Measured Performance
Expected performance
Scores
Based performance
Worst performance
Scores
Weight
Value  Pr oductivity indicator
Objective Matrix (OMAX) Model: Example
No.
Productivity
criteria
units
1 January 2003
The worst
performance
Expected
performance
Based
performance
Measured
performance on
30 dec.2003
1.
Speed of service
min./man
10
2
4
3
2.
Lateness
min./day
60
10
45
30
3.
Queuing
man
8
2
5
5
4.
Idle time
minute
60
15
30
40
5.
Absent
man/day
10
2
4
5
6.
Complain
man/wk
7
0
5
2
Objective Matrix (OMAX) Model : Example
 Index of Performance
= (Productivity Indicator – Based Performance)/Based Performance) x 1 00%
 Based Performance = 300
 Productivity Indicator = a sum of all values
= 120+180+30+30+30+70
= 460
 Value = Score x Weight
 Index of Performance = ((460 – 300)/300) x 100%
= 53.33%
Hanna Lestari, ST, M.Eng-FTI-UII
Model of Marvin E. Mundel
 This model measures total productivity by comparing
between productivity in Measured Period and Base Period
 Index of Productivity in base period is 100 so that there are
three states of index of productivity in measured period:
 IP < 100. It means that the productivity in measured
period less than base period
 IP = 100. It means that the productivity in measured
period equals base period
 IP > 100. It means that the productivity in measured
period more than base period
 The better the productivity, the higher the IP. The IP is
always more than 100
Hanna Lestari, ST, M.Eng-FTI-UII
Model of Marvin E. Mundel
AOMP
current performance index
AIMP
PI 
 100 
 100
AOBP
base performance index
AIBP
AOMP  Agregated Output , Measured Period
AOBP  Agregated Output , Base Period
AOMP
outputs index
AOBP
PI 
 100 
 100
AIMP
inputs index
AIBP
AIMP  Agregated Inputs, Measured Period
AIBP  Agregated Inputs, Base Period
Model of Marvin E. Mundel
Case Study : Garuda Indonesia has data as follow:
No
1.
2.
3.
4.
5.
6.
7.
8.
9.
Statement
2007
Ticketing
Direct labor cost
Indirect labor cost
Cargo service
Overhead cost
VIP flight service
Building cost for rent
Maintenance cost
Administration cost
10 billion
4 billion
2 billion
2 billion
1 billion
500 million
1.5 billion
800 million
200 million
2008
15 billion
5 billion
3 billion
1.4 billion
700 million
600 million
2 billion
500 million
300 million
 Determine: AOMP,AOBP,AIMP,AIBP,CPI,BPI,OI,II and IP
Model of Marvin E. Mundel
Solution:
1. Statements of output:
 Ticketing
 Cargo service
 VIP flight service
2. Statements of input:
 Direct labor cost
 Indirect labor cost
 Overhead cost
 Building cost for rent
 Maintenance cost
 Administration cos
Hanna Lestari, ST, M.Eng-FTI-UII
Model of Marvin E. Mundel
 AOMP = 15 + 1.4 +0.600 (billion) = 17 billion
 AOBP = 10 + 2 + 0.500 (billion) = 12.5 billion
 AIMP = 5 + 3 + 0.700 + 2 + 0.500 + 0.300 = 11.5 billion
 AIBP
= 4 + 2 + 1 + 1.5 + 0.800 + 0.200 = 9.5 billion
AOBP 12.5
BPI 

 1.32
AIBP
9.5
AOMP
17
CPI 

 1.48
AIMP 11.5
AOMP
17
AIMP 11.5
OI 

 1.38
II 

 1.2
AOBP 12.5
AIBP
9. 5
17
AOMP
IP2004  AIMP  100  11.5  100  112.35%
AOBP
12.5
AIBP
9.5
APC Model
 The American Productivity Center (APC) has been
advocating a productivity measure that relates
profitability with productivity and price recovery
factor. The way this measure is derived is:
profitability 
Sales output quantities  prices

Cost input quantities  unit cos t
 output quantities   prices 
  

 
 input quantities   unit cos t 
profitability   productivity  price re cov eryfactor
Hanna Lestari, ST, M.Eng-FTI-UII
APC Model
 The “productivity” ratio gives an indication of the amount
of resources consumed to produce the firm’s output
 The changes in “price recovery factor” over time indicate
whether changes in input cost are absorbed, passed on, or
overcompensated for in the prices of the firm’s output
 In this model, the capital input is given by total
depreciation plus profit relative to the total assets (i.e. fixed
assets + working capital) employed
 Thus, the capital input for any particular period =
depreciation for that period + (return on assets in base
period) x (current assets employed)
APC Model
Example:
APC Model
 In period 1, the firm had capital assets $ 100,000,
yielding $10,000 depreciation at the average rate
of 10%.
 The profit earned in period 1 was the difference
between the revenue and total input cost, that is,
$49,000 output minus $38,100 resulting in
$10,900.
 The base period (period 1) return on total capital is
calculated as follows:
total capital 
Hanna Lestari, ST, M.Eng-FTI-UII
return  profit  in base period
 fixed assets  working capital  in base period
APC Model
 Assuming that the working capital in period 1 was
$50,000;
$10,900
base  period return on total capital 
 0.073
$100,000  $50,000
Hanna Lestari, ST, M.Eng-FTI-UII
APC Model
 In period 2, we have assumed that the fixed assets
remained at $100,000, but the working capital
increased to $80,000.
 Thus return (profit) of the firm is $13,140, which is
the profit should have made if it had maintained its
profitability relative to its total assets
 However, the actual profit in period 2 is given as
$54,500 minus $44,500 resulting in $10,000
 This means that the firm’s profit fell short by
($13,140 - $10,000) = $3,140.
APC Model
APC Model
APC Model :
 Table 7.3 shows that labor productivity
improved by 11.81 % in period 2, and that
the wage rates increased considerably, as
indicated by a price recovery index of 0.814
 This means that the productivity increase
was overshadowed, with the net effect of a
drop in profitability by 1.000 – 0.962 =
0.038 or 3.8%
Model Craig Haris
Ot
Pt 
LC  RO
Pt = produktivitas total
C = Faktor masukan total
L = Faktor masukan tenaga kerja
R = Raw material and purchased parts input
O = Faktor masukan barang dan jasa lain
Ot = total ouput
Hanna Lestari, ST, M.Eng-FTI-UII
Hanna Lestari, ST, M.Eng-FTI-UII