03 Productivity, Competitiveness, &amp; Strategy

# 03 Productivity, Competitiveness, &amp;amp; Strategy -...

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03 - 1 Lesson 03 Three separate but related topics extremely important to business success

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03 - 2 One of the primary responsibilities of the operations manager is to achieve productive use of an organization's resources (labor, equipment, facilities, money, etc). In very general terms productivity is a measure of output based on input. This is usually calculated as a productivity ratio . Productivity measures can be computed for a single operation, a department, an organization, or even an entire country. Developing effective productivity measurements requires evaluation and selection of relative factors. Productivity Input Output ty Productivi =
03 - 3 Single Factor (Partial)Productivity Measures Energy Output Capital Output Machine Output Labor Output 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

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03 - 4 Example 2: Develop a productivity measure for a. 4 workers who install 720 yards of carpeting in 8 hours Single Factor (Partial)Productivity Measures yds/hour 22.5 8 * 4 720 Hours Labor Installed Carpet of Yards Labor Output = = = b. 1 machine produces 68 usable pieces in 2 hours 4 r pieces/hou 3 2 68 Time Production Pieces Usable Labor Output = = =
03 - 5 Multi-factor Productivity Measures Energy Capital Labor Output Machine Labor Output + + + Labor Capital Technology Energy

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03 - 6 Example 3: Develop a productivity measure for the combined input of labor and machine time using the following data: Output: 7,040 units Inputs: Labor - \$1,000, Materials - \$520, Overhead - \$2,000 Multi-factor Productivity Measures t\$ units/inpu 2,000 520 1,000 7,040 Overhead Material Labor Output 2 = + + = + +
03 - 7 Multi-factor Productivity Measures Example 4 (not in textbook): Develop the following productivity measures for a product that utilizes labor and machine time. Assume 10,000 units are produced in 500 hours and are sold for \$10/unit. The labor rate is \$9/hour. Option 1: Productivity as a measure of units. 5 units/hour 20 00 10,000 Hours Labor Units Output = = Option 2: Productivity as a measure of \$ 5 \$ \$/Input Output 22.2 9 * 00 10 * 10,000 \$ Labor \$ Output = = Can you think of any advantages or disadvantages for each option?

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03 - 8 Example 5(not in textbook): Develop a productivity measures for a product that utilizes labor machine time, raw materials and purchased materials. Assume 10,000 units are produced in 500 hours and are sold for \$10/unit. The labor rate is \$9/hour, the cost of the raw materials is
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## 03 Productivity, Competitiveness, &amp;amp; Strategy -...

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