What is the difference between “Production” and “Productivity”?

What is the difference between “Production” and “Productivity”?

Writing By,

Nurul Amin Jibon

IE Executive (Mohammadi Group)

B.Sc In Textile Engineer

Primeasia University. Batch: 091

Phone No : 01687-201045

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’ make100 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%.