Industrial Engineering and Management (21UIP441C)

Unit- I, Ch - 2

Dr. Shreeshail M. Pharsiyawar

Associate Professor
Department of Industrial & Production Engineering
Basaveshwar Engineering College, Bagalkote
Contents..
Productivity:
•Definition of productivity
•Productivity in individual enterprises
•Task of management
•Productivity of materials, land, building,
machine and power
•Measurement of productivity
•Factors affecting the productivity
•Productivity improvement programs,
wages and incentives (simple numerical
problems)
2
Introduction
• World population increasing - Over 90 per cent of that
increase has occurred in developing countries.
• People will be living below the poverty line and
struggling to meet their basic needs.
• Basic needs, quality of life and productivity
•Enough food every day to generate the energy needed for living and
Food working.

•Enough clothing to afford protection from adverse weather

Clothing conditions and to permit bodily cleanliness.

•A shelter that provides protection under healthy conditions and that is

Shelter equipped with certain household equipment and furniture.

•Security against violence and against unemployment, and that

Security provides for one’s personal needs in sickness or old age.

Health and •Safe drinking-water, sanitation, access to energy use, medical care,
essential services education and a means of transport.
3
Basic needs, quality of life and productivity
• The aspiration is to raise their standard of living
further and improve their quality of life.
• This is foreseen as an improvement in the quality of
these basic needs, and in the range and quantity
available so that a person exerts the option of
choice among various alternatives, for example in
housing, clothing or food.
• For a society or a nation to raise the standard of
living of its population, it must strive to maximize
the return from its resources or improve
productivity so that the economy can grow and
sustain a better quality of life.
4
PRODUCTIVITY
• Productivity is a measure of efficiency and output.
• Measured in terms of the amount of work or
output produced per unit of time, effort, or
resources.
• Productivity can refer to an individual's or
organization's ability to generate output in relation
to the resources invested, such as time, labor,
capital, or materials.
• It can also refer to the rate at which goods or
services are produced or the speed at which a
task is completed.
• Ultimately, productivity is a measure of how
effectively resources are used to achieve a
desired outcome.

5
Productivity, Effectiveness, and Efficiency
• Productivity: Create surplus through productive operations
Output (O) (within a time period,
Productivity = quality considered)
Input (I)

To improve Productivity..
(1) Increase O/P - - Same I/P
(2) Decrease I/P - - Same O/P
(3) Increase O/P - - Decrease I/P
Implies effectiveness and efficiency in
individual/organizational performance.
• Effectiveness: The achievement of objectives.
• Efficiency: The achievement of the ends with the
least amount of resources
6
PRODUCTIVITY IN THE INDIVIDUAL ENTERPRISE
• Productivity in the individual enterprise may be
affected by a series of external factors, as well as by a
number of deficiencies in its operations or internal
factors.
• External factors: availability of raw materials and skilled
labour, government policies towards taxation and
tariffs, existing infrastructure, capital availability and
interest rates, and adjustment measures applied to the
economy or to certain sectors by the government.
• These external factors are beyond the control of any one
employer.
• Other factors, however, are within the control of
managers in an enterprise

7
The output and input factors in an enterprise
• In a typical enterprise the output is normally defined in terms of products or services rendered. In a
manufacturing concern, products are expressed in numbers, by value and by conformity to
predetermined quality standards. In a service enterprise such as a public transport company or a
travel agency, the output is expressed in terms of the services rendered. In a transport company this
may be the number of customers or tons of cargo per kilometer carried.
• In a travel agency it could be value of tickets sold or average value of tickets per customer, and so
on. Both manufacturing and service enterprises should equally be interested in consumers' or users'
satisfaction, such as number of complaints or rejects.
• On the other hand, the enterprise disposes of certain resources or inputs with which it produces the
desired output. These are:
• Land and buildings: Land and buildings in a convenient location.
• Materials: Materials that can be converted into products to be sold, both as raw materials or auxiliary
materials such as solvents or other chemicals and paints needed in the process of manufacturing and
packaging material.
• Energy: Energy in its various forms such as electricity, gas, oil, or solar power.
• Machines and equipment: Machines and equipment necessary for the operational activities of the
enterprise, including those intended for transport and handling, heating or air conditioning, office
equipment, computer terminals and the like.
• Human resources: Men and women trained to perform the operational activity, to plan and control,
to buy and sell, to keep track of accounts and to perform other operations such as maintenance or
administrative and secretarial jobs.
• Another factor of production or input is that of capital which, while not explicitly defined here, is
implicitly included since it is used to finance the purchase of land, machinery, equipment, materials
and labour, and to pay for the services rendered by human resources.
• The use which is made of all these resources combined determines the productivity of the enterprise.

8
THE TASK OF MANAGEMENT
• The management of an enterprise is responsible for seeing that the enterprise resources
mentioned above are combined in the best possible way to achieve the highest
productivity.
• In any concern larger than a one-person business (and to some extent even in a one-
person business), harnessing and coordinating these resources and balancing one
resource against another is the task of management. If management fails to do what is
necessary, the enterprise will fail in the end. In such a case, the five resources become
uncoordinated — like the efforts of five horses without a driver. The enterprise — like a
driverless coach — moves forward jerkily, now held up for lack of material, now for lack
of equipment, because machines or equipment are badly chosen and even more
badly maintained, or because energy sources are inadequate or employees unwilling
to contribute their best. Figure 1 illustrates this management function. In its quest for
higher productivity, an efficiency-minded management acts to influence either one or
both of the two factors, the output (i.e. products and services) or the input (i.e. the five
resources at its disposal). Thus management may be able to produce a larger quantity
of, and/or better-quality or higher-value, products or services with the same input, or it
may achieve a better result by changing the nature of the input such as investing in
advanced technology, information systems and computers or by using an alternative
• source of raw material or energy.
• It is rare, however, that one manager or a small team of top managers can by
themselves attend to the normal running of an enterprise and at the same time devote
enough thinking and energy to the various issues involved in improving productivity.
More frequently they will rely on specialists to assist them in this task, and among them is
the work study practitioner. In the next chapter, we shall see how work study and
productivity are related.

9
10
Indices of Productivity
• Measurement of Productivity
Aggregate Output Total Output Total Production
Amount of Labour Material Inpiut Machine Hours Worked

Labour Material Machine

Productivity Productivity Productivity

Total Energy Capital

Productivity Productivity Productivity

Total Output Total Output Total Output

Labour, Material, Energy Input Capital Input
Machine, Capital,
Energy Inputs
11
Problem 1
• For a company XYZ, total inputs and
outputs are converted into monetary
values and are as follows:
• Output = ₹ 1,00,000
• Human input = ₹ 35,000
• Material input = ₹ 20,000
• Capital input = ₹ 25,000
• Energy input = ₹ 15,000
• Other miscellaneous expenses = ₹ 2,000.
• Calculate the labour productivity,
material productivity, energy
productivity, capital productivity and
total productivity.
12
Solution
Aggregate Output 1,00 000
1) Labour Productivity = = = 2.85714
Amount of Labour 35,000

Total Output 1,00 000

2) Material Productivity = = = 5
Material Input 20,000
Total Output 1,00 000
3) Energy Productivity = = = 6.67
Energy Input 15,000
Total Output 1,00 000
4) Capital Productivity = = = 4
Capital Input 25,000
Total Output
5) Total Productivity =
Human + Material + Energy + Capital + Other Expenses
1,00,000
=
35,000 + 20,000 + 15,000 + 25,000 + 2,000
= 1.03093

13
Problem 2
A time study was conducted to find out the standard times for making
various products A, B, C and D. These are given in Table 1.
Table 1: Standard times for making various products
Product Standard time
A 15
B 9
c 6
D 3
Table 2 presents the production data for two groups making these
products.
Table 2: Production data for two groups
Criteria Group 1 Group 2
Number of men working 15 15
Number of hours worked 8 8
Production of A product (in units) 150 105
Production of B product (in units) 300 325
Production of C product (in units) 25 30
Production of D product (in units) 400 350
Calculate the productivity of Groups 1 and 2. What is the overall
productivity of both the groups combined?
14
Soultion

15
FACTORS AFFECTING PRODUCTIVITY

(1)
(7) Human
Economic Factors
Factors

(6) (2)
Political Technological
Factors Factors

(5) (3)
Social Managerial
Factors Factors

(4)
Natural
Factors

16
(1) Human Factors
• The nature and conduct of a person is an important factor
that affects productivity. It may be divided into two
categories:
• Ability to work: Productivity rests on the potential or calibre
of an individual to work, be it labour or a manager. It is
often regulated by the education, training, experience,
attitude, aptitude, and health of a person.
• Willingness to work: Here, motivation and morale play an
important role in deciding a person’s will to work. Therefore,
factors that affect the will of employees include:
• Wage incentive schemes
• Worker’s participation in management
• Promotion rules
• Relationship of union with management
• Working conditions like sanitation, lighting, ventilation, canteen,
transport, etc also influence their will.

17
(2) Technological Factors
These factors also have a great impact on
productivity. This includes:
• Product design
• Plant layout
• Size and capacity of the plant
• Location of plant
• Timely supply of raw material
• Repairs and maintenance
• Material handling system
• Research and development
• Inventory control

18
(3) Managerial Factors
• Managers are the main lead of an organization.
• No matter how many skilled and efficient workers
the company has hired, or state-of-the-art
technology is used.
• If the attitude and competence of managers are
not up to the mark, productivity will remain low.
• Inefficient and indifferent management does
more harm to the company than good.
• But, if the managers are competent and
dedicated to their work, the company would be
able to reap extraordinary results.
• This is because only managers can make effective
use organization’s resources.
19
(4) Natural Factors
• It is quite obvious that there are some factors
that are not under the control of anyone.
• These are natural factors.
• The physical, geographical, geological, and
climatic conditions fall in this category.
• These factors highly influence industries that
carry out extraction activity.

20
(5) Social Factors
• We live in a society and we have to
follow its culture, traditions, customs,
rules, and norms.
• Also, it poses a significant influence on
productivity.
• However, the social factors, differ from
place to place.
• This means what is considered wrong in
India, might not be considered wrong
in other countries like Japan or USA and
vice versa.
21
(6) Political Factors
• To increase productivity, law and order,
peace, and stability of the government are a
must.
• Industrial policy, tariff policy, and taxation also
have an influence on the firm’s productivity.

22
(7) Economic Factors
There are certain factors that also have an
impact on productivity such as:
• Market size
• Banking and credit facilities
• Transport and communication system

23
Productivity Improvement Programs/Techniques
•Better plant layouts, efficient material handling systems and better working conditions can be
1. Work study determined using work study techniques.

2. Research and
•R&D activities can lead to better techniques of production and improvements in existing processes,
Development machinery, equipment, etc.
(R&D)
3. Production
•Better PPC in a factory ensures timely supply of materials, scheduling activities, proper maintenance,
planning and etc. Results in operating a factory to its fullest capacity.
control

•Advances in technological developments- mechanisation and automation result in higher output and
4. Automation better quality products.

•Wage incentive schemes help in increasing levels of morale and motivation among employees.
5. Incentive •Losses of production time caused due to employee absenteeism, labour turnover & disputes minimised,
schemes thus resulting in enhanced turnover.

6. Management •In MBO, superiors and subordinates jointly

by Objectives (i) specify measureable goals, (ii) define results expected of each individual, and (iii) assess the contribution of each individual.
Subordinate's participation in setting goals, & action plans in reviewing performance provides a good measure of self control.
(MBO)
7. Worker's
•Worker's participation in management by means of joint consultation, two way communication,
participation in grievance handling etc., promotes better industrial relations.
management
•Process of redesigning of a job to enlarge its scope. Provides opportunity for an individual in satisfying his higher
8. Job level needs and thus improves the morale and motivation of workers. Widens the skill, knowledge and confidence
enrichment of an employee.

•Flexi time is a work pattern that is a major departure from the tradition.
9. Flexi time •It allows the workers to set their own work hours subject to minimum number of work hours per week.
•Flexi time reduces the tardiness, overtime and short-term absenteeism of employees.

10. Quality
•Quality circles develop a sense of participation and contribution among workers.
circles
24
25