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PRODUCTION AND PRODUCTIVITY

PRODUCTION
Processes and methods employed in transformation of tangible inputs ( raw materials, semi-fininshed goods etc) and intangible inputs (ideas, information etc) into goods or service. Apparel production is the process of conversion of materials (INPUT) into completed, saleable garments (OUTPUT). May be produced by own plants or out sourcing

PRODUCTIVITY The amount of output per unit of input (labor, equipment and capital). There are many different ways of measuring productivity. For example, in a factory productivity might be measured based on the number of hours it takes to produce a good.

Why is productivity important?


Productivity helps to ultimately determine a firms costs. - Higher levels of productivity will lead to lower costs of production. - If a firm can produce any given quantity at a lower cost (due to productivity gains) this will improve the firms profit potential.

FACTORS OF PRODUCTION

3 factors of production

Human resources Inventory Facilities and Equipments

MEASURE OF

PERFORMANCE IN

RELATION TO PRODUCTIVITY OF THREE MAJOR RESOURCES

HUMAN RESOURCES
Overall percent daily/monthly/annual absenteeism indirect labor as a percentage of direct labor average direct labor operators per supervisor annual labor turnover

HUMAN RESOURCES
Direct Labor dollar cost per clock hour dollar cost per SAH earned excess cost per SAH Product Quality returns per 100 units in-process defects per 100 units outgoing defects per 100 units

HUMAN RESOURCES
Training training cost per hire training cost per operator average success rate per hire

INVENTORY

Turnover material inventory turns per year work in process (hours, days, weeks) finished goods inventory turns per year total inventory turns per year

INVENTORY

Distribution Center Customer Services shipping cost per dozen average time to process and ship orders unit volume per cubic foot percentage order accuracy percentage of complete shipments percentage of on time shipments

FACILITIES AND EQUIPMENT

Space
average

production space per SAH average production space per dollar sales average production space per employee distribution space per SAH distribution space per dollar sales building costs per dollar sales per SAH dollar cost per SAH earned rental cost per dollar sales per SAH rental cost per dollar sales per SAH per square foot

FACILITIES AND EQUIPMENT

Equipment investment per dollar sales investment per SAH produced Material Utilization percentage marker efficiency spreading efficiency losses at ends, splices, and edges

Labor 0 1 2 3 4 5 6 7 8 9 10

TPL
0

14 140 318 509 696 866 1010 1120 1188 1207

APL 14.0 70.0 106 127.3 139.2 144.3 144.3 140.0 132 120.7

TYPICAL AVERAGE PRODUCT OF LABOUR CURVE IN SHORT RUN