Methods and Work Measurement

LECTURE 3 :

MEASUREMENT MODEL OF PRODUCTIVITY

27 FEBRUARY 2009

Hanna Lestari, ST, M.Eng-FTI-UII @ 2009

 Why do We Care About Productivity?

Productivity is affected by efficiency, effectiveness,

and quality.
Productivity, together with innovation and quality
of working life, determine the total organizational
performance – profitability
Without productivity improvement, businesses do
not survive in a global economy.
Higher productivity means higher standard of
living

Hanna Lestari, ST, M.Eng-FTI-UII

 Total Organizational Performance

Efficiency

Innovation

Effectiveness Profitability
Productivity (organizational
Performance)

Quality of working life

Quality

Hanna Lestari, ST, M.Eng-FTI-UII

 Productivity Measurement Techniques

Multi-factors productivity: Output/multiple inputs

Total Productivity: Output/total inputs

Hanna Lestari, ST, M.Eng-FTI-UII

 Partial Productivity

Labour
Productivity
●
= Output/Labour
Material
Productivity
●
= Output/Material

Machine ●
Productivity
=Output/Machine
Hanna Lestari, ST, M.Eng-FTI-UII
 Partial Productivity

Energy
Productivity ●
=Output/Energy
Etc…

Contoh Soal:

Dalam sebulan PT. Noodle mampu memproduksi 10.000 units produk dengan 500 jam kerja,
berapa produktivitas tenaga kerja perusahaan tsb?

Jawab:

10,000 units/500hrs = 20 units/hour

Hanna Lestari, ST, M.Eng-FTI-UII

 Multi-factors Productivity

Multi-factors ●
Output/(Labor + machine)
productivity

Multi-factors Output/(Labor + machine+

●

productivity material)
Multi-factors
Output/(Labor + energy+
●
productivity
Etc… material)

Hanna Lestari, ST, M.Eng-FTI-UII

 Case Study

Berikut ini adalah data output hasil produksi dan input yang
digunakan oleh PT. Noodle dalam satu periode waktu:
- Output : $ 5000
- Labor : $ 600
- Material: $ 800
- Energy : $ 500
- Capital : $ 400
- Other expense input : $ 500
berdasarkan data-data tersebut diatas maka rasio produktivitas
parsial dan total perusahaan tsb pada periode dasar adalah:

Hanna Lestari, ST, M.Eng-FTI-UII

 Answer : Partial Productivity

Labor Productivity ●
= 5000/600= 8.33
Material
Productivity
●
= 5000/800= 6.25

Energy Productivity ●
= 5000/500= 10
Capital Productivity ●
= 5000/400= 12.5

Other expense
productivity
●
= 5000/500= 10
Hanna Lestari, ST, M.Eng-FTI-UII
 Answer: Total Productivity

Total Productivity :

= Total Output/ (labor + material + capital + energy +

other expense input)
= 5000 / (600+800+400+500+500)
= 5000/2800
= 1.785

Hanna Lestari, ST, M.Eng-FTI-UII

 Measurement Model of Productivity
● Objective
American
Model Craig Haris
● Objective
American
Matrix
Productivity
Model
Marvin Craig
E Mundel
Haris
●
Matrix
Productivity
(1976)
Marvin
Center E(APC)
(OMAX) Mundel
(1976)
Center (APC)
(OMAX)

Hanna Lestari, ST, M.Eng-FTI-UII

 Objective Matrix (OMAX)

 OMAX is a partial productivity measurement

developed for controlling productivity in the each
part of firm system based on criteria of
productivity.

 Developed by James L. Riggs (Dept. of Industrial

Engineering at Oregon State University) in 1980.

Hanna Lestari, ST, M.Eng-FTI-UII

 Objective Matrix (OMAX) Model
DEFINITION
BLOCK

QUANTIFICATION
BLOCK

WEIGHT AND
VALUE BLOCK
Objective Matrix (OMAX) Model
Pr oductivity criteria

Measured Performanc e
Expected performance

Scores

Based performance

Worst performance
Scores
Weight

Value  Pr oductivity indicator

Objective Matrix (OMAX) Model: Example

No. Productivity units 1 January 2003 Measured

criteria performance on
The worst Expected Based
30 dec.2003
performance performance performance

1. Speed of service min./man 10 2 4 3

2. Lateness min./day 60 10 45 30

3. Queuing man 8 2 5 5

4. Idle time minute 60 15 30 40

5. Absent man/day 10 2 4 5

6. Complain man/wk 7 0 5 2
 Objective Matrix (OMAX) Model : Example

Index of Performance
= (Productivity Indicator – Based Performance)/Based Performance) x 1 00%
Based Performance = 300
Productivity Indicator = a sum of all values
= 120+180+30+30+30+70
= 460
Value = Score x Weight
Index of Performance = ((460 – 300)/300) x 100%
= 53.33%

Hanna Lestari, ST, M.Eng-FTI-UII

 Model of Marvin E. Mundel

 This model measures total productivity by comparing

between productivity in Measured Period and Base Period
 Index of Productivity in base period is 100 so that there are
three states of index of productivity in measured period:
 IP < 100. It means that the productivity in measured
period less than base period
 IP = 100. It means that the productivity in measured
period equals base period
 IP > 100. It means that the productivity in measured
period more than base period
 The better the productivity, the higher the IP. The IP is
always more than 100

Hanna Lestari, ST, M.Eng-FTI-UII

 Model of Marvin E. Mundel

AOMP
AIMP current performance index
PI   100   100
AOBP base performance index
AIBP
AOMP  Agregated Output , Measured Period

AOBP  Agregated Output, Base Period

AOMP
AOBP outputs index
PI   100   100
AIMP inputs index
AIBP AIMP  Agregated Inputs , Measured Period
AIBP  Agregated Inputs, Base Period
 Model of Marvin E. Mundel

Case Study : Garuda Indonesia has data as follow:

No Statement 2007 2008
1. Ticketing 10 billion 15 billion
2. Direct labor cost 4 billion 5 billion
3. Indirect labor cost 2 billion 3 billion
4. Cargo service 2 billion 1.4 billion
5. Overhead cost 1 billion 700 million
6. VIP flight service 500 million 600 million
7. Building cost for rent 1.5 billion 2 billion
8. Maintenance cost 800 million 500 million
9. Administration cost 200 million 300 million

 Determine: AOMP,AOBP,AIMP,AIBP,CPI,BPI,OI,II and IP

 Model of Marvin E. Mundel

Solution:
1. Statements of output:
 Ticketing

 Cargo service

 VIP flight service

2. Statements of input:
 Direct labor cost
 Indirect labor cost
 Overhead cost
 Building cost for rent
 Maintenance cost
 Administration cos

Hanna Lestari, ST, M.Eng-FTI-UII

 Model of Marvin E. Mundel

 AOMP = 15 + 1.4 +0.600 (billion) = 17 billion

 AOBP = 10 + 2 + 0.500 (billion) = 12.5 billion
 AIMP = 5 + 3 + 0.700 + 2 + 0.500 + 0.300 = 11.5 billion
 AIBP = 4 + 2 + 1 + 1.5 + 0.800 + 0.200 = 9.5 billion
AOBP 12.5 AOMP 17
BPI    1.32 CPI    1.48
AIBP 9 .5 AIMP 11 .5
AOMP 17 AIMP 11 .5
OI    1.38 II    1.2
AOBP 12.5 AIBP 9.5
AOMP 17
IP2004  AIMP  100  11.5  100  112 .35%
AOBP 12.5
AIBP 9.5
 APC Model

The American Productivity Center (APC) has been

advocating a productivity measure that relates
profitability with productivity and price recovery
factor. The way this measure is derived is:

Sales output quantities prices

profitability  
Cost input quantities  unit cos t

 output quantities  prices 

     
 input quantities   unit cos t 

profitabil ity   productivi ty    price re cov eryfactor 

Hanna Lestari, ST, M.Eng-FTI-UII
 APC Model

 The “productivity” ratio gives an indication of the amount

of resources consumed to produce the firm’s output
 The changes in “price recovery factor” over time indicate
whether changes in input cost are absorbed, passed on, or
overcompensated for in the prices of the firm’s output
 In this model, the capital input is given by total
depreciation plus profit relative to the total assets (i.e. fixed
assets + working capital) employed
 Thus, the capital input for any particular period =
depreciation for that period + (return on assets in base
period) x (current assets employed)
APC Model
Example:
 APC Model

In period 1, the firm had capital assets $ 100,000,

yielding $10,000 depreciation at the average rate
of 10%.
The profit earned in period 1 was the difference
between the revenue and total input cost, that is,
$49,000 output minus $38,100 resulting in
$10,900.
The base period (period 1) return on total capital is
calculated as follows:
return  profit in base period
total capital 
 fixed assets workingcapital in base period
Hanna Lestari, ST, M.Eng-FTI-UII
 APC Model

Assuming that the working capital in period 1 was

$50,000;

$10,900
base  period return on total capital   0.073
$100,000  $50,000

Hanna Lestari, ST, M.Eng-FTI-UII

 APC Model

In period 2, we have assumed that the fixed assets

remained at $100,000, but the working capital
increased to $80,000.
Thus return (profit) of the firm is $13,140, which is
the profit should have made if it had maintained its
profitability relative to its total assets
However, the actual profit in period 2 is given as
$54,500 minus $44,500 resulting in $10,000
This means that the firm’s profit fell short by
($13,140 - $10,000) = $3,140.
APC Model
APC Model
 APC Model :

Table 7.3 shows that labor productivity

improved by 11.81 % in period 2, and that
the wage rates increased considerably, as
indicated by a price recovery index of 0.814

This means that the productivity increase

was overshadowed, with the net effect of a
drop in profitability by 1.000 – 0.962 =
0.038 or 3.8%
 Model Craig Haris

Ot
Pt 
LC  RO
Pt = produktivitas total
C = Faktor masukan total
L = Faktor masukan tenaga kerja
R = Raw material and purchased parts input
O = Faktor masukan barang dan jasa lain
Ot = total ouput

Hanna Lestari, ST, M.Eng-FTI-UII

Hanna Lestari, ST, M.Eng-FTI-UII