Lecture 3 Measurement Model of Productivity 27 Feb

LECTURE 3 :

MEASUREMENT MODEL OF PRODUCTIVITY27 FEBRUARY 2009

Methods and Work Measurement

Hanna Lestari, ST, M.Eng-FTI-UII @ 2009

Why do We Care About Productivity?

Hanna Lestari, ST, M.Eng-FTI-UII

Productivity is affected by efficiency, effectiveness, and quality.

Productivity, together with innovation and quality of working life, determine the total organizational performance – profitability

Without productivity improvement, businesses do not survive in a global economy.

Higher productivity means higher standard of living

Total Organizational Performance


Efficiency

Effectiveness

Quality

Productivity

Innovation

Quality of working life

Profitability(organizational Performance)

Productivity Measurement Techniques


Multi-factors productivity: Output/multiple inputs

Total Productivity: Output/total inputs

Partial Productivity


•= Output/LabourLabour Productivity

•= Output/MaterialMaterial Productivity

•=Output/MachineMachine Productivity

Partial Productivity


•=Output/EnergyEnergy

ProductivityEtc…

Contoh Soal:

Dalam sebulan PT. Noodle mampu memproduksi 10.000 units produk dengan 500 jam kerja, berapa produktivitas tenaga kerja perusahaan tsb?

Jawab:

10,000 units/500hrs = 20 units/hour

Multi-factors Productivity


•Output/(Labor + machine)

Multi-factors productivity

•Output/(Labor + machine+ material)


•Output/(Labor + energy+ material)


Etc…

Case Study


Berikut ini adalah data output hasil produksi dan input yang digunakan oleh PT. Noodle dalam satu periode waktu:- Output : $ 5000

- Labor : $ 600 - Material: $ 800 - Energy : $ 500 - Capital : $ 400 - Other expense input : $ 500

berdasarkan data-data tersebut diatas maka rasio produktivitas parsial dan total perusahaan tsb pada periode dasar adalah:

Answer : Partial Productivity


•= 5000/600= 8.33•= 5000/800= 6.25

Labor ProductivityMaterial

Productivity

•= 5000/500= 10•= 5000/400= 12.5

Energy ProductivityCapital Productivity

•= 5000/500= 10Other expense productivity

Answer: Total Productivity

Total Productivity :

= Total Output/ (labor + material + capital + energy + other expense input)= 5000 / (600+800+400+500+500)= 5000/2800= 1.785


Measurement Model of Productivity


Objective Matrix (OMAX)

Model Craig HarisMarvin E Mundel (1976)

American Productivity Center (APC)

Objective Matrix (OMAX)


OMAX is a partial productivity measurement developed for controlling productivity in the each part of firm system based on criteria of productivity.

Developed by James L. Riggs (Dept. of Industrial Engineering at Oregon State University) in 1980.

Objective Matrix (OMAX) Model

DEFINITION BLOCK

QUANTIFICATION BLOCK

WEIGHT AND VALUE BLOCK

Objective Matrix (OMAX) Model

criteriaoductivityPr

ePerformancMeasured

eperformancExpected

eperformancBased

eperformancWorstScoresWeight

indicatoroductivityValue Pr

Scores

Objective Matrix (OMAX) Model: Example

No. Productivity criteria

units 1 January 2003 Measured performance on 30 dec.2003The worst

performanceExpected

performanceBased

performance

1.

2.

3. 4.

5.

6.

Speed of service

Lateness

Queuing

Idle time

Absent

Complain

min./man

min./day

man

minute

man/day

man/wk

10

60

8

60

10

7

2

10

2

15

2

0

4

45

5

30

4

5

3

30

5

40

5

2

Objective Matrix (OMAX) Model : Example


Index of Performance = (Productivity Indicator – Based Performance)/Based Performance)

x 1 00%

Based Performance = 300Productivity Indicator = a sum of all values

= 120+180+30+30+30+70

= 460Value = Score x WeightIndex of Performance = ((460 – 300)/300) x

100% = 53.33%

Model of Marvin E. Mundel


This model measures total productivity by comparing between productivity in Measured Period and Base Period

Index of Productivity in base period is 100 so that there are three states of index of productivity in measured period: IP < 100. It means that the productivity in

measured period less than base period IP = 100. It means that the productivity in

measured period equals base period IP > 100. It means that the productivity in

measured period more than base periodThe better the productivity, the higher the IP. The

IP is always more than 100


100100 indexeperformancbase

indexeperformanccurrent

AIBP

AOBPAIMP

AOMP

PI

100100 indexinputs

indexoutputs

AIBP

AIMPAOBP

AOMP

PI

PeriodMeasuredOutputAgregatedAOMP ,

PeriodBaseOutputAgregatedAOBP ,

PeriodMeasuredInputsAgregatedAIMP ,

PeriodBaseInputsAgregatedAIBP ,


Case Study : Garuda Indonesia has data as follow:

Determine: AOMP,AOBP,AIMP,AIBP,CPI,BPI,OI,II and IP

No Statement 2007 2008

1. 2. 3.4. 5.6.7. 8.9.

TicketingDirect labor costIndirect labor cost Cargo serviceOverhead costVIP flight serviceBuilding cost for rentMaintenance cost Administration cost

10 billion4 billion2 billion2 billion1 billion500 million1.5 billion800 million200 million

15 billion5 billion3 billion1.4 billion700 million600 million2 billion500 million300 million



Solution:1. Statements of output: Ticketing Cargo service VIP flight service2. Statements of input: Direct labor cost Indirect labor cost Overhead cost Building cost for rent Maintenance cost Administration cos

AOMP = 15 + 1.4 +0.600 (billion) = 17 billionAOBP = 10 + 2 + 0.500 (billion) = 12.5 billionAIMP = 5 + 3 + 0.700 + 2 + 0.500 + 0.300 =

11.5 billionAIBP = 4 + 2 + 1 + 1.5 + 0.800 + 0.200 = 9.5

billion


32.15.9

5.12

AIBP

AOBPBPI 48.1

5.11

17

AIMP

AOMPCPI

38.15.12

17

AOBP

AOMPOI 2.1

5.9

5.11

AIBP

AIMPII

%35.112100

5.9

5.125.11

17

1002004

AIBP

AOBPAIMP

AOMP

IP

APC Model


The American Productivity Center (APC) has been advocating a productivity measure that relates profitability with productivity and price recovery factor. The way this measure is derived is:

tunitquantitiesinput

pricesquantitiesoutput

Cost

Salesityprofitabil

cos

tunit

prices

quantitiesinput

quantitiesoutput

cos

eryfactorrepricetyproductiviityprofitabil cov

The “productivity” ratio gives an indication of the amount of resources consumed to produce the firm’s output

The changes in “price recovery factor” over time indicate whether changes in input cost are absorbed, passed on, or overcompensated for in the prices of the firm’s output

In this model, the capital input is given by total depreciation plus profit relative to the total assets (i.e. fixed assets + working capital) employed

Thus, the capital input for any particular period = depreciation for that period + (return on assets in base period) x (current assets employed)

APC Model

APC Model Example:

APC Model


In period 1, the firm had capital assets $ 100,000, yielding $10,000 depreciation at the average rate of 10%.

The profit earned in period 1 was the difference between the revenue and total input cost, that is, $49,000 output minus $38,100 resulting in $10,900.

The base period (period 1) return on total capital is calculated as follows:

periodbaseincapitalworkingassetsfixed

periodbaseinprofitreturncapitaltotal

APC Model


Assuming that the working capital in period 1 was $50,000;

073.0000,50$000,100$

900,10$

capitaltotalonreturnperiodbase

In period 2, we have assumed that the fixed assets remained at $100,000, but the working capital increased to $80,000.

Thus return (profit) of the firm is $13,140, which is the profit should have made if it had maintained its profitability relative to its total assets

However, the actual profit in period 2 is given as $54,500 minus $44,500 resulting in $10,000

This means that the firm’s profit fell short by ($13,140 - $10,000) = $3,140.

APC Model

AP

C M

od

el

APC Model

Table 7.3 shows that labor productivity improved by 11.81 % in period 2, and that the wage rates increased considerably, as indicated by a price recovery index of 0.814

This means that the productivity increase was overshadowed, with the net effect of a drop in profitability by 1.000 – 0.962 = 0.038 or 3.8%

APC Model :

Model Craig Haris


OtPt

L C R O

Pt = produktivitas totalC = Faktor masukan totalL = Faktor masukan tenaga kerjaR = Raw material and purchased parts inputO = Faktor masukan barang dan jasa lain Ot = total ouput

Lecture 3 Measurement Model of Productivity 27 Feb

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