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POM Lecture 1

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43 views6 pages

POM Lecture 1

Uploaded by

Isteak ahamed Rahim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Lecture 1

PRODUCTIVITY

1.1 Introduction
Production/Operation management is the process which combines and transforms
various resources used in the production/operation subsystem of the organization into
value added products/services in a controlled manner as per the policies of the
organization.

The set of interrelated management activities which are involved in manufacturing


certain products is called production management and for service management, then
corresponding set of management activities is called as operation management.
Examples: (Products/goods)
Boiler with a specific capacity, Constructing flats, Car, bus, radio, television.
Examples: (Services)
Medical facilities, Travel booking services.
In the process of managing various subsystems of the organization executives at
different levels of the organization need to track several management decisions. The
management decisions are Strategic, tactical and operational.

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Corrections from feedback information:
 Tight quality check on the incoming raw-material.
 Adjustment of machine settings.
 Change of tools.
 Proper allocation of operations to machines with matching skills.
 Change in the production plans.

1.2 Productivity:

Productivity is a relationship between the output (product/service) and input (resources


consumed in providing them) of a business system. The ratio of aggregate output to the
aggregate input is called productivity. Productivity = output/Input
 For survival of any organization, this productivity ratio must be at least 1. If it is more
than 1, the organization is in a comfortable position. The ratio of output produced to the
input resources utilized in the production.

1.3 Importance:
Benefits derived from higher productivity are as follows:
 It helps to cut down cost per unit and thereby improve the profits.
 Gains from productivity can be transferred to the consumers in form of lower
priced Products or better quality products.
 These gains can also be shared with workers or employees by paying them at
higher rate.
 A more productive entrepreneur can have better chances to exploit expert
opportunities.
 It would generate more employment opportunity.
 Overall productivity reflects the efficiency of production system.
 More output is produced with same or less input.
 The same output is produced with lesser input.
 More output is produced with more input.

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 The proportional increase in output being more than the proportional increase in
input.

1.4 Productivity Measurement:


Productivity may be measured either on aggregate basis or on individual basis, which
are called total and partial measure.

Partial productivity indices, depending upon factors used, it measures the efficiency of
individual factor of production.

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PROBLEMS:
Example-1

The input and output data for an industry given in the table. Find out various
productivity measures like total, multifactor and partial measure.
Output and Input production data in dollar ($)

Output
1. Finished units 10,000
2. Work in progress 2,500
3. Dividends 1,000
4. Bonds -------
5. Other income --------

Input
1. Human 3,000
2. Material 153
3. Capital 10,000
4. Energy 540
5. Other Expenses 1,500

Solutions-
Total measure = Total Output = 13,500 = 0.89
Total Input 15,193

Multi factor measure = Total Output = 13,500 = 4.28


Human Material 3,153

Multi factor measure = Finished units = 10,000 = 3.17


Human Material 3,153

Partial Measure1 = Total Output = 13,500 = 25


Energy 540

Partial Measure2= Finished units = 10,000 = 18.52


Energy 540

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Note: For multifactor and partial measures it is not necessary to use total output as
numerator. Often, it is describing to create measures that represent productivity as it
relates to some particular output of interest.

Other fields for the measurement of partial measures of productivity are:

Business Productivity Measure


Restaurant Customers (Meals) per labor hour
Retail Store Sales per square foot
Utility plant Kilowatts per ton of coal
Paper mill Tons of paper per cord of wood

1.6 Techniques for Productivity Improvement:


Higher productivity in organization leads to national prosperity and better standard of
living for the whole community. The methods contribute to the improvement of
productivity are method study and work measurement by reducing work content and
Ineffective time.
Work content means the amount of work “contained in” a given product or process
measured in man-hour or machine-hour. Except in some cases like in processing
industries, actual operation times are far in excess of the theoretical minimum.
Ineffective time is the time for which the worker or machine or both are idle due to the
shortcomings of the management or the worker.

Example-2

A furniture manufacturing company has provided the following data. Compare the labor, raw materials
and supplies and total productivity of 2020 and 2021.

Output: Sales value of production in dollar ($)- 22,000 (in 2020) and 35,000 (in 2021)

Inputs: 2020 2021

Labor 10,000 15,000

Raw materials and Supplies 8,000 12,500

Capital equipment depreciation 700 1,200

Other 2,200 4,800

 Find out total Productivity of 2020, 2021.


 Find out single productivity (Labor, Raw Mat, Capital, Others) of 2020, 2021

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 Compare Productivity of these two years, which one is best?

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