Productivity Report at Cleopatra for

Real Estate Company

Production
Management

Professor: Bassam El Ahmadi

Prepared By: Ahmed Abd EL Rehim Mohamed
MBA Production Management Productivity Report

Definitions
Productivity:
Is traditionally defined as the measurement of units of output against units of input.
Productivity = Units Produced / Input Used
We can group productivity into four types:
1. Labor Productivity: Measures the efficiency of an organization’s employees by
considering the output per labor hour.

2. Capital Productivity: Measures the efficiency of how the physical capital of the

organization is used in manufacturing and other daily tasks.

3. Material Productivity: Measures the amount of input required for the production of a

unit of output. 

4. Total Factor Productivity (TFP): Accounts for the overall productivity factors not

included in capital, labor or material productivity. 

However, service-based organizations don’t necessarily use all these productivity

measures.

Efficiency:
Means doing the job well – with a minimum of resources and waste.

The Productivity Challenge

The creation of goods and services requires changing resources into goods and services.
The more efficiently we make this change, The more productive we are and the more value is
added to the good or service provided.
Productivity is the ratio of outputs (goods and services) divided by the inputs (resources, such as
labor and capital).
The operation manager’s job is to enhance (improve) this ratio of outputs to inputs.
Improving productivity means improving efficiency.

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MBA Production Management Productivity Report

Aims of Productivity
We use productivity measurement to compute the efficiency of using all the available inputs to
produce valuable outputs.
Such as the productivity of the sales men in the sale process, the efficiency of using raw
materials to build units, the efficiency of the customer service in replying the customers issues,
the efficiency of marketing department in promoting for the project and the efficiency of the
financial department in applying different payment plans suits the customer’s needs and how to
make an effective cash flow to fulfill the company liabilities and finally generate reports to help
top management to take decisions.
Improvement can be achieved in two ways:
1. Reducing inputs while keeping output constant
2. Increasing output while keeping inputs constant
Both represent an improvement in productivity.
In an economic sense input are labor, capital and management which are integrated into a
production system.
Management creates this production system, which provides the conversion of inputs and
outputs.

Productivity Measurement
The measurement of productivity can be quite direct.
Such is the case when productivity is measured by labor-hours per ton per specific type of steel,
although labor-hours is a common measure of input, other measures such as capital (dollars
invested), materials or energy (Kilo-watts of electricity) can be used.
An example of this can be summarized in the following equation:
Productivity = Units Produced / Input Used
The use of just one resource input to measure productivity is known as single factor
productivity.
However, a broader view of productivity is a multifactor productivity, which includes all inputs
(e.g., capital, labor, material, energy).
Multifactor productivity is also known as total factor productivity, multifactor productivity is
calculated by combining the inputs as shown below:
Output
Productivity = ‫ـــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ‬

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MBA Production Management Productivity Report

Labor + Material + Energy + Capital + Miscellaneous

Use of productivity measures aids managers how well they are doing, but results from the two
measures can be expected to vary.
If labor productivity growth is entirely the result of capital spending, measuring just labor
distorts the results.
Multifactor productivity is usually better, but more complicated.
Labor productivity is the more popular measure. The multifactor productivity measures provide
better information about the trade-offs among factors, but substantial measurement problems
remain.
 Important Note

Productivity measurement is particularly in the service sector, where the end product can
be hard to define

Productivity Variables
Productivity increases are dependent on three productivity variables
1. Labor
2. Capital
3. Management

 Labor

Three key variables for improved labor productivity are

1. Basic education appropriate for an effective labor force
2. Diet of the labor force
3. Social overhead that makes labor available, Such as transportation and sanitation

 Capital

Human beings are tool-using animals. Capital investment provides those tools.
Inflation and taxes increase the cost of capital, making capital investment increasingly
expensive.
When the capital invested per employee drops, we can expect drop in productivity.
Using labor rather than capital may reduce unemployment in the short run, but it also
makes economics less productive and therefore lowers wages in the long run.

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MBA Production Management Productivity Report

Capital investment is often a necessary, but seldom a sufficient ingredient in the battle
for increased productivity.
The trade-off between capital and labor is continually in flux. The higher the cost of
capital, the more projects requiring capital are “squeezed out”; they are not pursued
because the potential return on investment for a given risk has been reduced.
Managers adjust their investment plans to change in capital cost.

 Management

Management is a factor of production and an economic resource. Management is

responsible for ensuring that labor and capital are effectively used to increase
productivity.
Management accounts for over half of the annual increase in productivity.
This increase includes improvements made through the use of knowledge and the
application of technology.
Using knowledge and technology is critical in postindustrial societies.
Postindustrial societies are also known as knowledge societies.
Knowledge societies are those in which much of the labor force has migrated from
manual work to technical and information-processing tasks requiring ongoing education.
The required education and training are important high-cost items that are responsibility
of operations managers as they build organizations and workforces.
The expanding knowledge base of contemporary society requires that managers use
technology and knowledge effectively.

Productivity and the service sector

The service sector provides a special challenge to the accurate measurement of productivity and
productivity improvement.
Productivity of the service sector has proven difficult to improve because service sector work is:
1. Typically labor intensive ( for example, counseling, teaching )
2. Frequently focused on unique individual attributes or desires ( for example, investment
advice )
3. Often an intellectual task performed by professionals ( for example, medical diagnosis )
4. Often difficult to mechanize and automate ( for example, haircut )
5. Often difficult to evaluate for quality ( for example, performance of a law firm )
The more intellectual and personal the task, the more difficult it is to achieve increases in
productivity.

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MBA Production Management Productivity Report

 Productivity measurement for different departments in Cleopatra for

Real Estate

Sales department

In the sales department there is 8 sales persons they can sell 20 unit every month

Productivity for sales person = 20 / 8 = 2.5 Unit per Sales Person

When we compare the sales person productivity in Cleopatra with Talaat Mostafa which
is the benchmark for this industry we will find that the productivity for the sales person
in Talaat Mostafa is 3.5 unit per sales person every month which means that Cleopatra
for Real Estate need to improve the productivity for its sales persons.

Customer service department

In the customer service department there is 4 employees and they can serve 30 customer
per day

Productivity for customer service employees = 30 / 4 = 7.5 Customer per Employee

When we compare customer service productivity in Cleopatra with Talaat Mostafa which
is the benchmark for this industry we will find that the productivity for the employee of
customer service in Talaat Mostafa is 13.5 customer per employee every day which
means that Cleopatra for Real Estate need to improve the productivity for its customer
service employees by give them more training.

Engineering department

This department can build 70 unit with 500 ton of steel.

Productivity for Engineering department = 70 / 500 = 0.14 Unit / Ton

When we compare engineering department productivity in Cleopatra with Talaat Mostafa

which is the benchmark for this industry we will find that the productivity for the
engineering department in Talaat Mostafa is 0.14 Unit per Ton which means that
Cleopatra for Real Estate is on the right track.

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