Page 124 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 6: Productivity

Productivity measures have been used as tools for business improvement. The success of a Notes
business generally depends on its ability to deliver more real value for consumers without
using more labour, capital or other inputs.

There are several concepts of productivity. In addition to the single factor measure of productivity
there are also multifactor productivity measures (relating a measure of output to a bundle of
inputs). Another distinction, of particular relevance at the industry or firm level, is between
productivity measures that relate some measure of gross output to one or several inputs and
those which use a value-added concept to capture measurements of output. The input/output
relationships of the main productivity measures are shown in Table 6.1.

Table 6.1: Various Kinds of Productivity Measures

Productivity is also used at the national level. Productivity typically is measured as the rupee
value of output per unit of labour. This measure depends on the quality of the products and
services generated in a nation and on the efficiency with which they are produced. Productivity
data is available from different sources for national productivity, for sector-wise as well as
industry-wise performance. In improving the standard of living of a nation, productivity is
more important than money because productivity determines the output while money just
measures the value of the output.

Self Assessment

Fill in the blanks:
1. Productivity is the amount of output per unit of ……………… .
2. The word ‘productivity’ is broad enough to cover both efficiency and the ……………… .
3. Productivity is said to be high when more output is derived from the same input, or the
same output is obtained from a ……………… input.
4. At national level productivity is more important than ……………… because productivity
determines the output while ……………… just measures the value of the output.
5. Productivity is a ……………… concept.

6.2 Various Kinds of Productivity Measures

The measures that are of relevance from the point of view of the operations manager are labour
productivity, multiple factor productivity and total factor productivity.

6.2.1 Labour Productivity

Labour productivity is a single factor productivity measure (relating a measure of output to a
single measure of input). Labor productivity is the quantity of output produced by one unit of

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