Production is
Conversion of the resources to product which customers demand or the quantity
produced within the given time.
Production =
Output (Products or Services)
Productivity is
the ratio and the relationship between used resources and outputs
Productivity =
Output/ Input
Example 01 : A
line of operators’ make 100 pieces garments in a day. By improving the line
balance (better allocation of the necessary tasks between the operators which
reduces waiting time), output increases to 120. This is a (120-100/100) 20%
increase in production & also a 20% increase in productivity when using
garments as the unit of measure.
Example 02 :
Assume that the decision was taken that in order to secure future orders we
agreed a price deduction with the Buyer on the above line. The original CM of
$6 is reduced to $5.5, this equates to original “dollar’ output of 100x$6 =
$600 becoming 100x$5.5 = $550, this equates to an increase in dollars generated
of (600-550/550) 9%. I.e. when using dollars as the unit of measure we now have
an increase in productivity of 9%.
In these two
examples we have used different units of output, garments & dollars. If as
a result of re-balancing the line we have added 3 more operators to the
original 30 (that is 10% more INPUT) to eliminate a line blockage, the original
20% increase in productivity drops to 10%.