25B : Productivity

Question 1

what is productivity

Answer 1

• The ratio of the actual work produced compared to the theoretical amount of work that could be produced

For example: Takes 40 hours to make a car and it is known that, theoretically, it could take 30 hours if all the factors were right. These factors are:

•Working methods

•Technology & quality

•Motivation

•Training

Question 2

How can you measure productivity

Answer 2

Out put (per period)
—————————————-
number of employee (per period)

Example :

Example: 20 Fruit pickers who pick 40,000 apples per day = 2,000 apples
per worker each day
Ratio measures the output per employee and is a useful efficiency indicator.

Question 3

What is capital productivity

Answer 3

As firms become more capital intensive they may measure productivity:

             Output —————————————
     Capital employed

Example: Clothes company employs 10 sewing machinists that sew 900
garments per day = 90 garments per machine per day

Question 4

What are the problems with increasing productivity

Answer 4

Firms often struggle to raise productivity :

• Managers fail to use more resources effectively

• A lack of finance to purchase machinery

• Productivity will always depend upon training capital investments and production techniques