Labor Productivity

Productivity is the overall measure of the ability to produce a good or service.  This is the actual output of production compared to the actual input of resources.  There are several types of productivity; such as labor, machine, single-factor, and total factor productivity. Labor productivity is the rate of output of a worker or group of workers to an established standard or rate of output (TUI, 2015a).  An example of labor productivity is producing 2000 units of widgets and uses 200 hours to produce those widgets.

                2000/200 = 10 units/labor-hour.

To improve the factory productivity, workers will have to increase the number of widgets produced and decrease the hours used to produce the widgets. For example,

                4000/100 = 40 units/labor-hour.

Labor productivity is the output per unit of time or output per labor hour. Machine productivity is the output per unit of time or output per machine hour. Single-factor productivity is the average amount of a given product, which is output, attributed to a unit of a given resource, input.  Labor and capital are factors included in single-factor productivity. Total factor productivity includes the measuring of a department, plant, or firm individual productivities of all its resources, including labor, capital, energy, material, and equipment. These factors are combined and weighed according to how much each is valued and adding them altogether (TUI, 2015b).

Reference:

TUI (2015a).  Introduction to operations management (PPT deck).  Material in support of Module 1, OPM300 (February 2015).  Available from Trident University International, 5757 Plaza Drive, Cypress, CA 90630.

TUI (2015b).  Understanding productivity (PPT deck).  Material in support of Module 1, OPM300 (February 2015).  Available from Trident University International, 5757 Plaza Drive, Cypress, CA 90630.