Hanna Lestari, ST, M.Eng 1
Methods and Work Measurement
Lecture 2Productivity and Quality
20 February 2009
Hanna Lestari, ST, M.Eng 2
• 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?
Hanna Lestari, ST, M.Eng 3
• 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
What is Productivity?
Hanna Lestari, ST, M.Eng 4
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)
What is Productivity?
Hanna Lestari, ST, M.Eng 5
• 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)
What is Productivity?
Hanna Lestari, ST, M.Eng 6
• 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
What is Productivity?
Hanna Lestari, ST, M.Eng 7
• 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
What is Productivity?
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
Hanna Lestari, ST, M.Eng 9
• 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
Hanna Lestari, ST, M.Eng 10
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!
Hanna Lestari, ST, M.Eng 11
• 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
Hanna Lestari, ST, M.Eng 12
Efficiency:
Are we doing
the things
right?
Effectiveness:Are we doing the
right thing?
Hanna Lestari, ST, M.Eng 13
Greater “productivity” Greater “productivity” increases increases
department incomedepartment income !
Greater “productivity” Greater “productivity” increases increases
department incomedepartment income !
Hanna Lestari, ST, M.Eng 14
Effects of Productivity on Business
Profits
Sales
Wage IncreaseCompetition
Growth
Hanna Lestari, ST, M.Eng 15
Quality of Work: What is Quality?
Hanna Lestari, ST, M.Eng 16
Five Factors Affecting Quality
Hanna Lestari, ST, M.Eng 17
Five Factors Affecting Quality
Hanna Lestari, ST, M.Eng 18
Five Factors Affecting Quality
Hanna Lestari, ST, M.Eng 19
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
Hanna Lestari, ST, M.Eng 20
What are Quality Cost?
Hanna Lestari, ST, M.Eng 21
Quality and Productivity
Hanna Lestari, ST, M.Eng 22
Quality-Productivity Ratio
Top Related