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2-1
Productivity
 Productivity ratios are used for
 Planning workforce requirements
 Scheduling equipment
 Financial analysis
 Productivity
 A measure of the effective use of resources,
usually expressed as the ratio of output to input.
2-2
Productivity
 Partial measures
 output/(single input)
 Multi-factor measures
 output/(multiple inputs)
 Total measure
 output/(total inputs)
Productivity =
Outputs
Inputs
2-3
A. Productivity Growth
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
Productivity Growth =
2-4
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Energy
Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital
Productivity
Units of output per machine hour
machine hour
Machine
Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor
Productivity
C. Examples of Partial Productivity Measures
2-5
Example
7500 Units Produced
Sold for Rs.10/unit
Cost of labor of Rs.10,000
Cost of materials: Rs.5,000
Cost of overhead: Rs.20,000
What is the
multifactor
productivity
“MFP”?
2-6
Example Solution
MFP = Output
Labor + Materials + Overhead
MFP = (7500 units)*(100)
10,000 + 5,000 + 20,000
MFP = 21.420
MFP = 750,000
35,000
2-7
Factors Affecting Productivity
Management Capital
Technology Quality
2-8
Factors Affecting Productivity
1. CAPITAL
2. QUALITY
3. TECHNOLOGY
4. MANAGEMENT
2-9
 Standardization
 Use of Internet
 Computer viruses
 Search for right product or misplaced
item
 Scrap Rates
 New Workers
Other Factors Affecting Productivity
2-10
 Safety
 Shortage of IT Trained Workers
 Layoffs
 Labor turnover
 Design of the workspace
 Motivation or Incentive plans that reward
productivity
Other Factors Affecting Productivity
2-11
Bottleneck Operation
 Bottleneck is one process in a chain of processes,
such that its limited capacity ( increased time of
completion, or increased labour requirement)
reduces the capacity of the whole chain
2-12
Improving Productivity
1. Develop productivity measures
2. Determine and isolate critical (bottleneck)
operations
3. Develop methods for productivity improvements
4. Establish reasonable goals
5. Get management support
6. Measure and publicize improvements
7. Clearly differentiate between productivity and
efficiency
2-13
Pakistani Productivity Example
 Calculate the change in productivity of Pakistani
Textile Industry between the years 2003-04 and
2004-05? ( Installed Capacity)
Parameter 2003/4 2004/5 Change
Number of
mills
399 426
Spindles (000) 9286 9815
Rotors(000) 145.6 151.6
2-14
Pakistani Productivity Example
 Calculate the change in productivity of Pakistani
Textile Industry between the years 2003-04 and
2004-05? ( Working Capacity)
Parameter 2003/4 2004/5 Change
Number of
Looms(000)
4.3 4.9
Spindles (000) 7710 8531
Rotors(000) 67.3 75.1
2-15
Pakistan Automobile Industry
 Calculate the Productivity Change for Pakistani Automobile
Industry between the years 2003-04 and 2004-05?
Type 2003-04 2004-05 % change in
Productivity
Cars 79655 100213
Motorcycles 263149 386589
Trucks 1669 1999
Buses 1151 1503
Tractors 28583 35308

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Management & Leadership Skill Development Lecture 5.ppt

  • 1. 2-1 Productivity  Productivity ratios are used for  Planning workforce requirements  Scheduling equipment  Financial analysis  Productivity  A measure of the effective use of resources, usually expressed as the ratio of output to input.
  • 2. 2-2 Productivity  Partial measures  output/(single input)  Multi-factor measures  output/(multiple inputs)  Total measure  output/(total inputs) Productivity = Outputs Inputs
  • 3. 2-3 A. Productivity Growth Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth =
  • 4. 2-4 Units of output per kilowatt-hour Dollar value of output per kilowatt-hour Energy Productivity Units of output per dollar input Dollar value of output per dollar input Capital Productivity Units of output per machine hour machine hour Machine Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Labor Productivity C. Examples of Partial Productivity Measures
  • 5. 2-5 Example 7500 Units Produced Sold for Rs.10/unit Cost of labor of Rs.10,000 Cost of materials: Rs.5,000 Cost of overhead: Rs.20,000 What is the multifactor productivity “MFP”?
  • 6. 2-6 Example Solution MFP = Output Labor + Materials + Overhead MFP = (7500 units)*(100) 10,000 + 5,000 + 20,000 MFP = 21.420 MFP = 750,000 35,000
  • 8. 2-8 Factors Affecting Productivity 1. CAPITAL 2. QUALITY 3. TECHNOLOGY 4. MANAGEMENT
  • 9. 2-9  Standardization  Use of Internet  Computer viruses  Search for right product or misplaced item  Scrap Rates  New Workers Other Factors Affecting Productivity
  • 10. 2-10  Safety  Shortage of IT Trained Workers  Layoffs  Labor turnover  Design of the workspace  Motivation or Incentive plans that reward productivity Other Factors Affecting Productivity
  • 11. 2-11 Bottleneck Operation  Bottleneck is one process in a chain of processes, such that its limited capacity ( increased time of completion, or increased labour requirement) reduces the capacity of the whole chain
  • 12. 2-12 Improving Productivity 1. Develop productivity measures 2. Determine and isolate critical (bottleneck) operations 3. Develop methods for productivity improvements 4. Establish reasonable goals 5. Get management support 6. Measure and publicize improvements 7. Clearly differentiate between productivity and efficiency
  • 13. 2-13 Pakistani Productivity Example  Calculate the change in productivity of Pakistani Textile Industry between the years 2003-04 and 2004-05? ( Installed Capacity) Parameter 2003/4 2004/5 Change Number of mills 399 426 Spindles (000) 9286 9815 Rotors(000) 145.6 151.6
  • 14. 2-14 Pakistani Productivity Example  Calculate the change in productivity of Pakistani Textile Industry between the years 2003-04 and 2004-05? ( Working Capacity) Parameter 2003/4 2004/5 Change Number of Looms(000) 4.3 4.9 Spindles (000) 7710 8531 Rotors(000) 67.3 75.1
  • 15. 2-15 Pakistan Automobile Industry  Calculate the Productivity Change for Pakistani Automobile Industry between the years 2003-04 and 2004-05? Type 2003-04 2004-05 % change in Productivity Cars 79655 100213 Motorcycles 263149 386589 Trucks 1669 1999 Buses 1151 1503 Tractors 28583 35308