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Methods and Work Measurement

Methods and Work Measurement. Lecture 2 Productivity and Quality 20 February 2009. What is Productivity?. One of the primary responsibilities of an operations manager is to achieve productive use of an organization’s resources.

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Methods and Work Measurement

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  1. Methods and Work Measurement Lecture 2 Productivity and Quality 20 February 2009 Hanna Lestari, ST, M.Eng

  2. What is Productivity? • One of the primary responsibilities of an operations manager is to achieve productive use of an organization’s resources. • The first time the word "productivity" was mentioned in an article by Quesnay in the year 1766. Hanna Lestari, ST, M.Eng

  3. What is Productivity? • In 1883, Littre defined productivity as the "faculty to produce," that is, the desire to produce. • The early twentieth century (1900s), that the term acquired a more precise meaning as a relationship between output and the means employed to produce that output Hanna Lestari, ST, M.Eng

  4. What is Productivity? Productivity is the quotient obtained by dividing output by one of the factors of production. In this way it is possible to speak of the productivity of capital, investment, or raw materials according to whether output is being considered in relation to capital, investment or raw materials, etc. (Organization for European Economic Cooperation (OEEC), 1950) Hanna Lestari, ST, M.Eng

  5. What is Productivity? • productivity is always a ratio of output to input (Fabricant, 1962) • productivity as a family of ratios of output to input (Siegel, 1976) • total productivity is the ratio of tangible output to tangible input (Sumanth,1979) Hanna Lestari, ST, M.Eng

  6. What is Productivity? • Productivity is an index that measures output (goods and services) relative to the input (labor, materials, energy, and other resources) used to produce them. It is usually expressed as the ratio of output to input: Output • Productivity = --------------- Input Hanna Lestari, ST, M.Eng

  7. What is Productivity? • Productivity is affected by efficiency, effectiveness, and quality. • Productivity, together with innovation and quality of working life, determine the total organizational performance, which is usually measured by profitability in the free-enterprise Hanna Lestari, ST, M.Eng

  8. Ways to Increase Productivity • Increase output using the same or a lesser amount of (input) resource. (↑ O ↔ I) • Reduce amount of (input) resource used while keeping output constant or increasing it. (↔ O ↓ I) • Use more resource as long as output increases at a greater rate. (↑ O ↑ I) • Decrease output as long as resource use decreases at a greater rate. (↓ O ↓ I) Hanna Lestari, ST, M.Eng

  9. Ways to Increase Productivity • The term "productivity" is often confused with the term "production." Many people think that the greater the production, the greater the productivity. This is not necessarily true. • Productionis concerned with the activity of producing goods and services. • Productivity is concerned with the efficiency and effectiveness with which these goods and services are produced. Hanna Lestari, ST, M.Eng

  10. Greater “productivity” reduces the Expense per Unit of Service! Hanna Lestari, ST, M.Eng

  11. Efficiency and Effectiveness for productivity improvement • Efficiency is a necessary but not a sufficient condition for productivity. In fact, both effectiveness and efficiency are necessary in order to be productive. • Efficiency is the ratio of actual output generated to the expected (or standard) output prescribed. Effectiveness, on the other hand, is the degree to which the relevant goals or objectives are achieved. • Effectiveness involves first determining the relevant (right) goals or objectives and then achieving them. If, for example, nine out of ten relevant goals are achieved, the effectiveness is 90%. One can be very efficient and still not be productive. Hanna Lestari, ST, M.Eng

  12. Efficiency: Are we doing the things right? Effectiveness: Are we doing the right thing? Hanna Lestari, ST, M.Eng

  13. Greater “productivity” increases department income ! Hanna Lestari, ST, M.Eng

  14. Effects of Productivity on Business Profits Sales Wage Increase Competition Growth Hanna Lestari, ST, M.Eng

  15. Quality of Work: What is Quality? Hanna Lestari, ST, M.Eng

  16. Five Factors Affecting Quality Hanna Lestari, ST, M.Eng

  17. Five Factors Affecting Quality Hanna Lestari, ST, M.Eng

  18. Five Factors Affecting Quality Hanna Lestari, ST, M.Eng

  19. What are Quality Cost? Hanna Lestari, ST, M.Eng

  20. What are Quality Cost? • Prevention costs Design/Process Improvement, Engineering Personnel Training,High Quality Material • Appraisal costs (Detection) Inspection & Testing thru sampling • Internal Failure costs Scrapping, Reworking Downtime, Delay Time • External Failure costs Repair, Replacement under warranty Product Recall Product Liability Hanna Lestari, ST, M.Eng

  21. Quality and Productivity Hanna Lestari, ST, M.Eng

  22. Quality-Productivity Ratio Hanna Lestari, ST, M.Eng

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