Page 134 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 6: Productivity

 The measures that are of relevance from the point of view of the operations manager are Notes
labour productivity, multiple factor productivity and total factor productivity.
 Labor productivity is the quantity of output produced by one unit of production input in
a unit of time.
 Multiple Factor Productivity is the productivity achieved when more than one input or
inputs are consumed to make the outputs.

 Total Factor productivity is the year-by-year change in the output where a number of
factors are taken into consideration.
 Productivity is a ratio, while production relates to a volume.
 Economies of scale allow firms to increase productivity by making operations larger.
 Technology determines both the maximal physical quantity of output that can be reached
as well as the number and the quality of inputs required.
 Productivity applies equally to the blue-collar workforce as to people doing intellectual
work.
6.5 Keywords

Labour Productivity: Quantity of output produced by one unit of production input in a unit of
time.

Multiple Factor Productivity: Productivity achieved when more than one input or inputs is
consumed to make the outputs. The outputs are measured either in money terms or the number
of units produced.
Production: Measure of the volume of output achieved.
Productivity: Ratio of the outputs achieved from an activity to the inputs consumed to make
those outputs.
Total Factor Productivity: Year-by-year change in the output where a number of factors are
taken into consideration.

6.6 Review Questions

1. Define the term ‘productivity’.
2. Productivity is a basic yardstick of an organization’s health. Explain.
3. How is it different from production?
4. What measures would you suggest to improve productivity of a firm? Give examples.
5. Explain how the nature of work has changed, and describe how that is affecting productivity.
6. How do computers and information technology impact productivity?
7. What are the major dissimilarities in the productivity aspect of manufacturing and service
firms?
8. If an organization produces more output with the same level of resources, but the quality
of the output is lower, in this case what will be the state of productivity?

9. Differentiate among the various kinds of productivity measures?
10. Is productivity a simple concept or a multifaceted concept? Give practical illustrative
reasons in support of your answer.

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