Production or Productivity?

Few examples of productivity

• Fuel consumption of vehicle in km/lit

• Bottle machine out put in bottles/hour
• No of customers served by front desk representative per hour
• Diesel consumption of generator in liters per hour
• Number of lumens produced by bulb per Watt
• Return on investment - ROI
- 1500 Lumens production - 1500 Lumens production
- Consumption = 150 W - Consumption = 15 W
- Productivity = 10 lumens/Watt - Productivity = 100 lumens/Watt

- 1500 lumens - 1500 lumens

- Cost is PKR 100 - Cost is PKR 160
- Productivity = 15 lumens/rupee - Productivity = 9.4 lumens/rupee

Single Factor Productivity

- 1500 Lumens production - 1500 Lumens production
- Consumption = 150 W - Consumption = 15 W
- Electricity rate = PKR 0.5/W - Electricity rate = PKR 0.5/W
- Cost is PKR 100 - Cost is PKR 160

- Productivity - Productivity
- = 1500 lumens/(PKR75+PKR100) - = 1500 lumens/(PKR7.5+PKR160)
- = 8.6 lumens/rupee - = 8.9 lumens/rupee

Multi Factor Productivity

Labor Productivity

Labor productivity is the rate of output per worker within a specified

unit of time. It is always measured as output per labor-hour.

Productivity = Output/Hours worked x no, of labor

A company that processes fruits and vegetables is able to produce 400 cases
of canned peaches in one half hour with four workers. What is labor
productivity?

Productivity = Output / Input

= 400/(0.5X4)
= 200 cases per labor-hour
Class Problem
Carbondale casting produces cast bronze valve on a 10-person
assembly line. On a recent day, 160 valves were produced during an 8-
hr shift.
a) Calculate the labor productivity of the line
b) Arshad, the process manager at Carbondale, changes the layout and
was able to increase production to 180 valves per 8-hr shift. What is
the new labor productivity per labor hour
c) What is the percentage of productivity increase?
Class Problems
Bashir makes wooden boxes which are used to ship bicycles. Bashir and
his three employees invest a total of 40 hours per day making the 120
boxes.
a) What is their productivity?
b) Bashir and his employees discussed redesigning the process to
improve efficiency. If they can increase the rate to 125 per day, what
will be their new productivity?
c) What will be their unit increase in productivity per hour?
d) What will be their percentage change in productivity?
Class Problems
A bicycle tire manufacturing company produces 1000 tires per day with the
following resources
Labor – 400 hours per day @ $12.5 per hour
Raw material – 20,000 pounds per day @ $1 per pound
Energy - $5000 per day
Capital cost - $ 10,000 per day
a) What is the labor productivity per labor hour at this factory?
b) What is the multifactor productivity for these tires at this factory?
c) What is the percentage change in multifactor productivity if process manager
reduces the energy bill by $1000 per day without cutting production or changing
any other input?