BUSM Ch 2 Productivity

Productivity=

output/input

Output is

goods and services related to the input

Input is

labor, materials, energy, and any other resources used to produce it

Productivity growth =

((Current productivity - previous productivity)/previous productivity)*100

Types of productivity measures

Partial measures, Multifactor measures, and Total measures

Labor productivity

units of output per labor hour
units of output per shift
value-added per labor hour
dollar value of output per labor hour

Machine productivity

units of output per machine hour
dollar value of output per machine hour

Capital productivity

Units of output per dollar input
Dollar value of output per dollar input

Energy productivity

Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour

examples of labor productivity:

yards of carpet installed/labor hours
= yards of carpet installed per labor hour

Calculations of multifactor productivity measure inputs and outputs using a common unit of measurement, such as cost. For instance, the measure might use cost of inputs and units of the output:

Quantity of production / labor cost + material cost + overhead

Determine the multifactor productivity for the combined input of labor and machine time using the following data:
Output: 7,040 units
Input
Labor: $1,000
Materials: $520
Overhead: $2,000

7040/(1000+520+2000) = 2 units per dollar input

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 b

Multifactor Productivity =
(Possible leads)(No. of workers)(Fees)(conversions percentage) / Labor cost + material cost + overhead
(400)(2)($100)(.1) / 2(40)($20) + $130 + $1000 =
$8000 / $2730 = 2.93

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

Multifactor Productivity =
usable output / labor cost + material cost + overhead cost
300 units / (3 workers
8 hours
$20/hour) + 600 pounds
$1LB) + ( 3 workers
8 hours
$20hours
1.5)
300 units / $480 +$600 + 720 = .167 units of output per dollar input