Measurement model of productivity

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Methods and Work Measurement

• Lecture 3
• Measurement model of productivity
• 27 February 2009

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Why do We Care About Productivity?

• 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

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Total Organizational Performance
Efficiency
Innovation
Effectiveness
Profitability (organizational Performance)
Productivity
Quality of working life
Quality
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Productivity Measurement Techniques
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Partial Productivity
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Partial Productivity
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
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Multi-factors Productivity
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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

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Answer Partial Productivity
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Answer Total Productivity

• Total Productivity

Total Output/ (labor material capital
energy other expense input) 5000 /
(600800400500500) 5000/2800 1.785
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Measurement Model of Productivity
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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.

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Objective Matrix (OMAX) Model

• Definition block
• Quantification block
• Weight and value block

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Objective Matrix (OMAX) Model
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Objective Matrix (OMAX) Model Example
No. Productivity criteria units 1 January 2003 1 January 2003 1 January 2003 Measured performance on 30 dec.2003
No. Productivity criteria units The worst performance Expected performance Based performance Measured performance on 30 dec.2003
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
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Objective Matrix (OMAX) Model Example

• Index of Performance
• (Productivity Indicator Based
  Performance)/Based Performance) x 1 00
• Based Performance 300
• Productivity Indicator a sum of all values
• 12018030303070
• 
  460
• Value Score x Weight
• Index of Performance ((460 300)/300) x 100
• 
  53.33

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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 lt 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 gt 100. It means that the productivity in
  measured period more than base period
• The better the productivity, the higher the IP.
  The IP is always more than 100

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Model of Marvin E. Mundel
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Model of Marvin E. Mundel

• Case Study Garuda Indonesia has data as follow

No Statement 2007 2008
1. 2. 3. 4. 5. 6. 7. 8. 9. Ticketing Direct labor cost Indirect labor cost Cargo service Overhead cost VIP flight service Building cost for rent Maintenance cost Administration cost 10 billion 4 billion 2 billion 2 billion 1 billion 500 million 1.5 billion 800 million 200 million 15 billion 5 billion 3 billion 1.4 billion 700 million 600 million 2 billion 500 million 300 million

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

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Model of Marvin E. Mundel

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

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Model of Marvin E. Mundel

• AOMP 15 1.4 0.600 (billion) 17 billion
• AOBP 10 2 0.500 (billion) 12.5 billion
• AIMP 5 3 0.700 2 0.500 0.300 11.5
  billion
• AIBP 4 2 1 1.5 0.800 0.200 9.5
  billion

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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

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APC Model

• The productivity ratio gives an indication of
  the amount of resources consumed to produce the
  firms 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 firms 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)

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APC Model Example
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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

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APC Model

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

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APC Model

• 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 firms profit fell short by
  (13,140 - 10,000) 3,140.

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APC Model
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APC Model
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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

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Model Craig Haris
Pt produktivitas total C Faktor masukan
total L Faktor masukan tenaga kerja R Raw
material and purchased parts input O Faktor
masukan barang dan jasa lain Ot total ouput
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