Methods and Work Measurement

Hanna Lestari, ST, M.Eng 1

Methods and Work Measurement

Lecture 2Productivity and Quality

20 February 2009


• One of the primary responsibilities of an operations manager is to achieve productive use of an organization’s resources.

• The first time the word "productivity" was mentioned in an article by Quesnay in the year 1766.

What is Productivity?


• In 1883, Littre defined productivity as the "faculty to produce," that is, the desire to produce.

• The early twentieth century (1900s), that the term acquired a more precise meaning as a relationship between output and the means employed to produce that output



Productivity is the quotient obtained by dividing output by one of the factors of production. In this way it is possible to

speak of the productivity of capital, investment, or raw materials according to whether output is being considered in relation to capital, investment or raw materials, etc. (Organization for European

Economic Cooperation (OEEC), 1950)



• productivity is always a ratio of output to input (Fabricant, 1962)

• productivity as a family of ratios of output to input (Siegel, 1976)

• total productivity is the ratio of tangible output to tangible input (Sumanth,1979)



• Productivity is an index that measures output (goods and services) relative to the input (labor, materials, energy, and other resources) used to produce them. It is usually expressed as the ratio of output to input:

Output• Productivity = ---------------

Input



• Productivity is affected by efficiency, effectiveness, and quality.

• Productivity, together with innovation and quality of working life, determine the total organizational performance, which is usually measured by profitability in the free-enterprise


Hanna Lestari, ST, M.Eng

8

• Increase output using the same or a lesser amount of (input) resource. (↑ O ↔ I)

• Reduce amount of (input) resource used while keeping output constant or increasing it.(↔ O ↓ I)

• Use more resource as long as output increases at a greater rate. (↑ O ↑ I)

• Decrease output as long as resource use decreases at a greater rate. (↓ O ↓ I)

Ways to Increase Productivity


• The term "productivity" is often confused with the term "production." Many people think that the greater the production, the greater the productivity. This is not necessarily true.

• Production is concerned with the activity of producing goods and services.

• Productivity is concerned with the efficiency and effectiveness with which these goods and services are produced.

Ways to Increase Productivity


Greater “productivity” Greater “productivity” reduces the Expense per reduces the Expense per

Unit of Service!Unit of Service!

Greater “productivity” Greater “productivity” reduces the Expense per reduces the Expense per

Unit of Service!Unit of Service!


• Efficiency is a necessary but not a sufficient condition for productivity. In fact, both effectiveness and efficiency are necessary in order to be productive.

• Efficiency is the ratio of actual output generated to the expected (or standard) output prescribed. Effectiveness, on the other hand, is the degree to which the relevant goals or objectives are achieved.

• Effectiveness involves first determining the relevant (right) goals or objectives and then achieving them. If, for example, nine out of ten relevant goals are achieved, the effectiveness is 90%. One can be very efficient and still not be productive.

Efficiency and Effectiveness for productivity improvement


Efficiency:

Are we doing

the things

right?

Effectiveness:Are we doing the

right thing?


Greater “productivity” Greater “productivity” increases increases

department incomedepartment income !

Greater “productivity” Greater “productivity” increases increases

department incomedepartment income !


Effects of Productivity on Business

Profits

Sales

Wage IncreaseCompetition

Growth


Quality of Work: What is Quality?


Five Factors Affecting Quality


What are Quality Cost?

1. Prevention costs

Design/Process Improvement, Engineering

Personnel Training,High Quality Material

2. Appraisal costs (Detection)

Inspection & Testing thru sampling

3. Internal Failure costs

Scrapping, Reworking

Downtime, Delay Time

4. External Failure costs

Repair, Replacement under warranty

Product Recall

Product Liability


What are Quality Cost?


Quality and Productivity


Quality-Productivity Ratio

Methods and Work Measurement

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