Nibm-Operations Management

Operations Management - II

1. Explain Overall Productivity and Factorial Productivity.

Answer:

In modern industry, diverse resources like raw material, labour, capital, plant and machinery and management are employed, which are called inputs and they help to achieve the final production or output. Productivity represents the relationship that exists between output and input or in other words it is the amount of output per unit. Productivity aim at the maximization of output by utilizing lesser resources, there is an increase in productivity. On the other hand, if an increase in production is affected by a corresponding increase in the quantum of input information there is not increase in productivity.

Measurement of overall productivity means the productivity of the industry / business as a whole taking all input factors together. As the various factors of input, i.e., materials, labour, and overhead, cannot be expressed in terms of a common unit of measurement, cost of different units of input is adopted by a common unit of measurement, the money (sales) value of output may be taken for calculating productivity. Thus overall productivity may be measured by the following formulae:

Value of Output

Overall Productivity = ---------------------------

Cost of Input

Total Cost + Profit (Net Added Value)

= ---------------------------------------------------------

Total Cost

1+ Net Added Value

= --------------------------------------

Total Cost

This method of measuring overall productivity is also known as value added concept of productivity. Added value concept cannot be applied to non-profit organizations or where output cannot be measured in money terms.

Overall productivity can also be measured as:

Profit

Return on Capital Employed = --------------------------

Capital Employed

Profit Sales

Or =...