Productivity

Productivity is a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs. It is computed by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. Productivity is a critical determinant of cost efficiency.

Measures of productivity

Productivity can be examined in various ways, and its measures are often closely associated with the management of production systems. A measure of productivity can be expressed as the ratio of output to input. Productivity can be measured in terms of output per labor hour or output per investment.

Labor productivity

Labor productivity is the value of goods and services produced in a period of time, divided by the hours of labor used to produce them. In other words, labor productivity measures output produced per unit of labor, usually reported as output per labor hour.

Capital productivity

Capital productivity is the ratio of output (goods or services) to the input of physical capital. The capital includes buildings (factories, offices, warehouses), equipment (machines, computers, vehicles, tools), and inventories (materials, work-in-progress, finished goods).

Energy productivity

Energy productivity is the ratio of output (goods or services) to the input of energy. Energy productivity can be measured in various ways. Common measures of energy productivity include GDP per unit of energy input (GDP/energy input), and the inverse of energy intensity (1/energy intensity).

Material productivity

Material productivity is the ratio of output (goods or services) to the input of material. Material productivity is a measure of the efficiency of a production process. It is calculated as the ratio of the amount of material used in production to the amount of output produced.

Productivity improvement

Productivity improvement refers to the process of making more goods and services with the same amount of inputs. Productivity improvement can be achieved through either more efficient use of inputs, or through the use of better inputs. In the context of production, productivity improvement usually refers to discovering more efficient manufacturing processes.

See also

• Efficiency
• Production (economics)
• Input–output model
• Operations research
• Production theory basics

References

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