Productivity
• Productivity Measures are useful to the following:
1. To track performance over time
2. To determine what has changed and then devise
means of improving productivity in the subsequent
periods.
3. To judge the performance of an entire industry or
the productivity of a country as a whole.
• Methods: by Standardizing the process and procedures where ever
possible to reduce variability can have a significant benefit for both
production and quality.
• Capital: From manual packing to automated packing but requires
capital investment for auto packing comparing to manual.
• Quality: Example will it be 100% inspection which is time
consuming or just random sampling?
• Technology: the fact is that many productivity gains in the past have
come from technological change such as automation, computers,
calculators and so on…
• Management: A supportive management will boost morale
of employees
• Raw Materials: Will production be able to perform will if
raw materials are substandard or don’t come on time?
• Equipment: What will be the output if the machines are
too old and experience downtime?
• Working Condition/Environment: Will one produce more if
the work area is too hot?
SAMPLE PROBLEMS FOR PRODUCTIVITY
• Example # 1
• 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 the
labor productivity?
Productivity = output / labor hours worked
= 400 / (4 x ½)
= 400 / 2 = 200 Can per hour
SAMPLE PROBLEMS FOR PRODUCTIVITY
• Example # 2
• A wrapping paper company produced 2,000 rolls of paper one day.
Standard price is $ 1/roll. Labor cost was $ 160, material cost was $ 50,
and overhead was $ 320. Determine the multifactor productivity.
Productivity = output / (labor cost + material cost + overhead)
= 2000 / (160+50+320)
= 2000 / 530 = 3.77 rolls per $
SAMPLE PROBLEMS FOR PRODUCTIVITY
• Example # 3
• Find the productivity if four workers installed 720 square yards of
carpeting in eight hours.
Productivity = output / workers hours worked
= 720 / (4 x 8)
= 720 / 32 = 22.5 square yards per hour
SAMPLE PROBLEMS FOR PRODUCTIVITY
• Example # 4
• Compute the productivity of a machine which produced 68 usable pieces
in two hours.
Productivity = output / machine hours produced
= 68 / (1 x 2)
= 68 / 2 = 34 usable pieces per hour
SAMPLE PROBLEMS FOR PRODUCTIVITY
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Example # 5
Determine the multifactor productivity for the combined input of the labor
and the machine time using the following:
Input:
Labor: $ 1,000; Materials: $ 520; Overheads: $ 2,000. Keep in mind the
Production is 1760 unit
Multifactor Productivity = output / (labor + materials + overheads)
= 1760 / (1000 + 520 + 2000)
= 1760 / 3520 = 0.5 unit per $
SAMPLE PROBLEMS FOR PRODUCTIVITY
Problem No#1
• Collins Little Company has a stuff of 4, each working 8 hours per day
(for a payroll cost of $ 640 / day) and overhead expenses of $ 400 /
day. Collins processes and closes on 8 titles each day.
• The company recently purchased a computerized title search
system that will allow the processing of 14 titles per day. Although
the staff, their works hours, and pay will be same, the overheads
expenses are now $ 800 per day.
Calculate:
a) Old labor productivity
b) New labor productivity
c) Old multifactor productivity
d) New multifactor productivity
Part (a):
Old labor productivity = output / input
= 8 / (4 x 8) = 8 / 32
= 0.25 titles per labor hour
Part (b):
New labor productivity = output / input
= 14 / (4 x 8) = 14 / 32
= 0.4375 titles per labor hour
Solution
Part (c):
Old multifactor productivity = output / (payroll + overhead)
= 8 / (640 + 400) = 8 / 1040
= 0.0077 title/$
Part (d):
New multifactor productivity = output / (payroll + overhead)
= 14 / (640 + 800) = 14 / 1440
= 0.0097 title/$