Multifactor Productivity Before and After Changes Generally, the economists use the term “Multifactor Productivity” (MFP) similar to “Total factors Productivity” (TFP). Both of
these terms are used to measure in different concerns. TFP is calculated by taking all the inputs into account such as labor, capital and intermediate inputs like energy and raw materials (The Productivity Council, 2012). On the other hand our operation management case study assignment help experts says that MFP is calculated on the basis of only labor and capital inputs. So, TFP has a wider area of measurement rather than MFP due to their distinctions. The productivity is a ratio between the output and input that is calculated on the basis of following formula: Formula: Productivity = Output / Input In this problem, the following are the Multifactor productivity of Dulac Box plant before and after that are given as: MFP before: (250 × 2) boxes / ($10 × 5 × 16 + $3000 + $400) = 500 Boxes / ($800 + $3000 + $400) = 500 Boxes / 4200 = 0.119 boxes per dollar MFP after: (300 × 2) boxes / ($10 × 5 × 16 + $3200 + $400) = 600 Boxes / ($800 + $3200 + $400) = 600 Boxes / 4200 = 0.136 boxes per dollar Importance of Awareness of Productivity Changes It is very important for the firm that it be aware about the changes made for the productivity. These changes provide a look for the company to identify opportunities and improve the organizational performance and also help to improve the efforts that are doing. It is necessary because productivity is affected by cost of per unit that directly affects price of the units (Asche & Bjorndal, 2011). Productivity changes have an impact on the competitive advantages that a firm may have. Due to increase in product production of firm, the standard of living of people can increase that makes them able to purchase more products from the market.
Changes in productivity also influence the benefits of consumers that they acquired from the firm. So, the firm should keep on eyes on productivity changes to be more effective in the industry. At the same time, productivity changes come into existence due to change in the input and output. These changes also increase the profits of business that support company to increase in employees’ salaries. The compassionate capitalists firm thinks that increase in profits can be shared in terms of money or bonus to the employees. Productivity changes also increase the demand of employees in the company. It is also essential that firm should aware about the productivity changes; because they may increase demand of other resources made by the employees (Mackie, 2008). Productivity indicates the rate at which workers are employed for production process. The today’s environment is a fast changing environment that can provide cheaper labor and helps to decrease the cost of production. These resources produce valued output for the firm. Therefore, productivity changes are required by firm to reduce production cost and to increase organizational profit. Productivity changes provide an overview of its productivity factors such as technology, efficiency, real cost saving, benchmarking production process and living standards. All these factors affect the productivity by making some changes in the production process (Giovannini & Nezu, 2001). The productivity displays a relationship among the resources (inputs) and goods and services (outputs) of the firm.
Measurement of productivity changes is essential to know the impact of productivity measurement on the profit and cost of the firm that affects overall production process. These are sources of economic growth that improve standard of living. The firm can evaluate competitive advantages, revenues and profit of the firm that help it to gain competitive advantages by awareness of productivity changes. Implications of Changes in Productivity Parameters There are many changes made in the parameters of productivity during the production process. Changes in the parameters increase output of the firm due to making some additional efforts (Komarek & Ahmadi-Esfahani, 2011). In this situation, training was used by Dulac Box plant that increased its output from 250 boxes to 300 boxes per shift. In addition, it is also increased the multifactor productivity of Dulac Box plant from 0.119 boxes/dollar to 0.136 boxes/dollar. The calculation of productivity was also influenced due to increase in the total output from 500 boxes to 600 boxes per day. It is quite significant for Dulac Box plant that its output has increased due to change in the productivity parameters. In addition, the given increase in productivity has a larger impact on poverty alleviation. The value of output and input also influences productivity parameters that are good for increasing productivity. The firm can determine the impact of productivity changes that which will be effective for the firm (Dupont & Sollberger, 2009). The changes help to identify the growth of the firm in different situations. Efficiency is a ratio of effective output over input. It is helpful to understand about effectiveness of the productivity changes for the firm. For example, if the firm considers net sales as output then gross margin is an effective output. Firm can reorganize the workplace for the employees due to change in the productivity parameter. It assumes that reorganized costs are less than reorganized productivity gains that are good for the ability of firm. It is quite effective to measure the quality and quantity of the output that are changed (Casasnovas, Rivera & Currais, 2005). Changes are helpful to determine the growth of productivity from the previous productivity. From the parameter changes, it can be determined that what factor affects the productivity and at what a limit. It also develops a method to determine the productivity for improvement in the organization. Productivity Concept and its Application The ability to manufacture a product and service is the productivity. The productivity is an overall measurement that identifies how organizational resources can be managed to attain objectives of business operations in terms of quality and quantity. Productivity is an index that measures output relative to the input (Department of Labor, 2010).
The organizational objectives can be achieved in the effective manner in two ways by increasing productivity. In one way, productivity can be increased by increasing output of the organization and other way is decrement in the input. In both conditions, productivity increases due to reverse effect. Whereas, there is no effect on the results, if both input and output have similar effect weather it increases or decreases. Productivity is an objective concept that can be measured against a universal standard. Productivity is also applicable in monitoring the purpose of corporate planning, organization improvement and for comparison with its competitors. In addition, corporate planning can be made effective by measuring productivity that provides appropriate results against the goals set by the organization (Sparks, 2010). The use of productivity is also appropriate in the project control that helps to manage budget for a specific project. Improvement is essential for the organization in the industry to attain more profit and to increase its reputation. A firm can gain competitive advantages by comparing its performance with its competitors’ performance. Productivity can also be defined logically and observed empirically due to be a scientific concept. It is because; measurement of productivity is done on the basis of quantity that characterizes as a variable. Productivity is more correct with efficiency that is a measure of effectiveness and productivity is an output oriented concept (Barðdal, 2008). There are three types of productivity, in which it can be expressed such as partial factor productivity, multifactor productivity and total factor productivity. Thus, it can be said that productivity is quite effective and applicable in various field of an organization.
References Asche, F. & Bjorndal, T. (2011). The Economics of Salmon Aquaculture. (2nd ed.). UK: John Wiley & Sons. Barðdal, J. (2008). Productivity: Evidence from Case and Argument Structure in Icelandic. USA: John Benjamins Publishing Company. Casasnovas, G.L., Rivera, L. & Currais, L. (2005). Health and Economic Growth: Findings and Policy Implications. USA: MIT Press. Department of Labor. (2010). Food & Beverage Service Sector Productivity Study. Retrieved April 21, 2012 from http://www.dol.govt.nz/er/bestpractice/productivity/researchreports/foodbeverage/ Dupont, J. & Sollberger, P.A. (2009). Productivity Measurement and Analysis. OECD Publishing. Giovannini, E. & Nezu, R. (2001). Measuring Productivity OECD Manual: Measurement of Aggregate and Industry-Level Productivity Growth. Retrieved April 21, 2012 from http://www.oecd.org/dataoecd/59/29/2352458.pdf Komarek, A.M. & Ahmadi-Esfahani, F.Z. (2011).Impacts of price and productivity changes on banana-growing households in Uganda. Agricultural Economics, 42(1), 141–151. Mackie, C. (2008). Strategies for a Bea Satellite Health Care Account: Summary of a Workshop. USA: National Academies Press. Sparks, D. L. (2010). Advances in Agronomy. USA: Academic Press. The Productivity Council. (2012). FAQs. Retrieved April 21, 2012 from http://www.productivitycouncil.org.bb/info.cfm?catinfo=4#7 Now you can get multifactor productivity case study assignment help and business assignment help services from qualified and experienced assignment writers of US, UK and Australia. Students who need any topic case study assignment help can touch with our 24X7 live support system or can send e-mail at info@www.assignmenthelpexperts.com