Productivity
Productivity = Output / Input
The parent of every measure in this chapter. Decide what counts as output (usable output only) and which inputs go in the denominator before you divide.
- Output
- Usable goods or services produced, in units or at standard price
- Input
- Labour, material, energy, capital, in units or in money
Labour productivity
Labour productivity = Quantity produced / Labour hours
= Output at standard price / Wages paid
When the question names workers, hours or wages. Convert workers and hours into labour hours before dividing.
- Labour hours
- Number of workers x hours each worked
- Wages paid
- Total wage bill for the same period
Multifactor productivity
MFP = Output / (Labour + Material + Overhead)
When more than one input is priced. Overhead stated as a multiple applies to labour cost alone unless the question says otherwise.
- Output
- Units, or units x standard price if the answer is to be unitless
- Overhead
- Often given as a multiple of labour cost
Total factor productivity
TFP = Production at standard price
---------------------------------------------
Labour + Materials + Overhead + k(capital invested)
When capital invested and a charge rate k are given. It is multifactor productivity with capital added.
- k
- Charge rate applied to capital, e.g. 0.10
- Capital invested
- Value of the capital employed in the period
Materials productivity
Materials productivity = Production output (Rs)
---------------------------------------------
Raw materials + Packaging materials + Supplies
When the question isolates the material side, typically in a process industry.
- Production output
- Value of output in rupees
- Supplies
- Consumables that are not raw material or packaging
Productivity growth
Growth % = (Current productivity - Previous productivity) / Previous productivity x 100
Comparing two periods. The denominator is always the earlier period. Keep the sign.
- Current
- This period's productivity, on the same measure
- Previous
- Last period's productivity, on the same measure
Process yield
Process yield = Good output / Raw material input
Where there is scrap, and as the service-sector stand-in for productivity (cars rented / cars available).
- Good output
- Usable output only, scrap excluded
- Raw material input
- Quantity of material fed in, or capacity offered in a service