The document discusses the concept of productivity, defined as the output generated by a production or service system relative to the inputs provided. It highlights the contributions of labor, capital, and management to productivity increases and explains methods to measure productivity at various economic levels. The importance of productivity metrics for decision-making, operational improvement, and competitive analysis is emphasized, along with different models and approaches for evaluating and improving productivity.

1. Presented by,
Deepak Tyagi
214218005

2. A general
relationship
definition
between
is that productivity
the output generated
is the
by a
production or service system and the input provided
to create this output.
2

4. Productivity Variables
4
• Labour - contributes about 1/6 of the
annual increase
• Capital - contributes about 1/6 of the
annual increase
• Management - contributes about 4/6 of
the annual increase

5. 5

6. Two types of productivity ratio can be used to
measure productivity at all economic levels.
6

7. 9
10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of R/M: $30,000
Overhead: $15,500
Example

8. 10
Output
Labor + Materials + Overhead
(10,000 units) * ($10)
(500)*($9) + ($30,000) + ($15,500)
TP = 2.0
Example : Total
Productivity
TP =
TP =

9. • 10,000 units / 500hrs = 20 units/hr
• (10,000 units * $10/unit) / 500hrs = $200/hr
• 10,000 units / (500hrs * $9/hr) = 2.2 unit/$
• (10,000 units * $10/unit) / (500hrs * $9/hr) = 22.22
14
Example: Labor
Productivity

10.  Important for productivity improvement.
 Effective tool for decision-making at all
economic levels.
 To evaluate the impact of national
development programmes.
 To help analyse effectiveness and efficiency.
(enterprises productivity)
 Stimulate operational improvement.(labour
Productivity)
10

12. Three of the most common purposes are:
 Comparing an enterprise with its competitors;
 Determining the relative performance of
departments and workers;
 Comparing relative benefits of various types
of input for collective bargaining and gains
sharing.
12

13. • It emphasizes the efficient utilization of all the factors of
production which are scarce universally.
• It attempts to eliminate wastage.
• It facilitates the comparison of the performance of a company to
its competitors or related firms, in terms of aggregate results
and of major components of performance.
• It enables the management to control the performance of the
company by identifying the comparative benefits rising out of
the use of different inputs.
Advantages of Productivity:

14.  Productivity measurement and evaluation system (ProMES)
 Deterministic productivity accounting (DPA)
 The National Productivity Institute (NPI)
 Theory of constraints (ToC)
 The total productivity model (TPM)
 Alan Lawlor's approach (Lawlor)
 Applied productivity - Gold's approach (Gold)
 Operation function analysis (OFA)
 International Labour Organisation- (ILO)
 Quick productivity appraisal (QPA)
 Kurosawa and Goshi - Japan Productivity Center (Kurosawa)
 Multifactor productivity measurement model (MFPMM)
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15.  Gold’s point out that the objective of a firm is not to maximize physical
output relative to physical inputs.
 He states that one should view them as a part of a linkage system: a linkage
system that ties physical productivity measures to such managerial criteria as
return on investment or profitability.
 It is one of the approach to measure the productivity, which mainly focuses
on return on investment along with attributing profits to five specific
elements of performance:
1. Unit cost.
2. Product price.
3. Productivity of facilities.
4. Use of facilities.
5. Allocation of capital resources between fixed and working capital.

16.  It is one of the approach to measure the productivity,
which mainly focuses on return on investment along
with attributing profits to five specific elements of
performance:
1. Unit cost.
2. Product price.
3. Productivity of facilities.
4. Use of facilities.
5. Allocation of capital resources between fixed and working
capital.

18. Profit
Investment
Product revenue
out put
= -
Total cost
out put
* out put
capacity
*
Capacity
Fixed investment
* Fixed investment
Total investment

19. RESULT

21. 21