CHAPTER:2

COMPETITIVENESS, STRATEGY AND

PRODUCTIVITY (PART-2)
D R . M D . TA M Z I D U L I S L A M
 I often say that when you
can measure what you are
speaking about, and express
it in numbers, you know
something about it; but
when you cannot measure
it, when you cannot express
it in numbers, your
knowledge is of a meager
and unsatisfactory kind. If
you can not measure it, you
can not improve it.
Lord Kelvin

Dr. Tamzid
 THE BALANCED SCORECARD

Dr. Tamzid
 PRODUCTIVITY
• Productivity is the basic measure of performance
considering the value of outputs (products and Services)
and value of input.
• Productivity=f(Input,Output)
• P=Output/Input
• Multifactor Productivity (MFP): comprises all the inputs
• Outputs: Profit, Revenue, Sales, Customer satisfaction
• Inputs: Labor hour/cost, Material cost, Machine cost,
Distribution cost, Overhead cost or any other costs
•

Dr. Tamzid
 PROBLEM SOLVING 1
• Three employee process 600 insurance in a week. They
work for 8 hours per day, 5 days per week. Calculate the
labor productivity.

Ans:
Labor Productivity=No. of policy processed/Employee Hours
=600 policies/(3 employees)(40 Hrs per employee)
=5policies/hour

Dr. Tamzid
 PROBLEM 2
• A train service charges Tk 18 per ticket plus Tk 3 as
surcharge to fund planned equipment upgrades. It
expects to sell 4700 tickets during the eight week
summer season. During that period, the train service will
experience Tk 110,000 in labor cost. Materials required
for each ticket sold is Tk 1.30. Overhead during the
period comes to Tk 79,000.
• What is the Multifactor productivity ratio?
• If the train service staff work an average of 310 person-hours per
week for the 8 weeks of summer season, what is the labor
productivity ratio?

Dr. Tamzid
 PROBLEM 3

Compute the multifactor productivity measure for an

eight-hour day in which the usable output was 300 units,
produced by three workers who used 600 pounds of
materials. Workers have an hourly wage of $20 and
material cost is $1 per pound. Overhead is 1.5 times labor
cost.

Dr. Tamzid
 PROBLEM 5
A health club has two employees who work on lead
generation. Each employee works 40 hours a week, and is
paid $20 an hour. Each employee identifies an average of
400 possible leads a week from a list of 8,000 names.
Approximately 10 percent of the leads become members
and pay a one time fee of $100. Material costs are $130 per
week, and overhead costs are $1,000 per week. Calculate
the multifactor productivity for this operation in fees
generated per dollar of input.

Dr. Tamzid
PRODUCTIVITY IN THE SERVICE SECTOR

Dr. Tamzid
FACTORS THAT AFFECT PRODUCTIVITY

• Technology
• Standardization
• Quality differences
• Scrap rates
• New workers
• Safety
• A shortage of information
• Layoffs
• Labor turnover and Incentives
• Design
Dr. Tamzid
Dr. Tamzid