Chapter15Solutions-Hansen6e

Chapter15Solutions-Hansen6e - CHAPTER 15 PRODUCTIVITY...

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CHAPTER 15 PRODUCTIVITY MEASUREMENT AND CONTROL QUESTIONS FOR WRITING AND DISCUSSION 1. Total productive efficiency is the point where technical and allocative efficiency are achieved. It is the point where the optimal quantity of inputs is used to produce a given output. 2. Technical efficiency means that for any mix of inputs, no more of any one input is used than necessary. Allocative efficiency means that the least costly and most technically ef- ficient mix is chosen. 3. Productivity measurement is a quantitative assessment of productivity changes. 4. If the productivity ratio (output/input) has only one input, then it is a partial measure. If all inputs are included, then it is a total measure of productivity. 5. An operational productivity measure is ex- pressed in physical terms, whereas a finan- cial productivity measure is expressed in dollars. 6. Partial measures can be misleading since they do not consider possible trade-offs among inputs. They do, however, allow some assessment of how well individual factors are being used and, additionally, of- ten serve as input to total measures. Total measures are preferred because they provide a measure of the overall change in productivity, and they allow managers to as- sess trade-offs among inputs. 7. A base period serves as a standard or benchmark for assessing changes in pro- ductive efficiency. 8. Profile measurement and analysis computes a series of operational partial productivity measures and compares this series with the corresponding series of the base period to assess the nature of the productivity changes. Profile analysis does not indicate whether productivity changes are good or bad when trade-offs among inputs exist. No value is attached to productivity changes. 9. Profit-linked productivity measurement and analysis is an assessment of the amount of profit change—from the base period to the current period—attributable to productivity changes. 10. Profit-linked productivity measurement al- lows managers to assess the economic ef- fects of productivity improvement programs. It also allows valuation of input trade-offs— a critical element in planning productivity changes. 11. The price-recovery component is the differ- ence between the total profit change and the change attributable to productivity effects. 12. Activity productivity analysis measures changes in the productivity of individual activities. It does this by measuring the in- puts and outputs of each activity and com- paring the results against a base period. Both profile and profit-linked measures are possible. The approach is limited because it can be applied only to value-added activit- ies. 13. Process productivity analysis measures pro- cess productivity by calculating two compon- ents and then summing these two compon- ents. The first component is simply activity productivity. The second component is activity output efficiency. For the second component, process output is defined and individual activity output is viewed as pro-
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Chapter15Solutions-Hansen6e - CHAPTER 15 PRODUCTIVITY...

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