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Plant Management Efficiency and Productivity

Two significant areas of plant management include productivity and efficiency of a plant. address the relationship between productivity and efficiency. Consider the following questions:

What is the difference between productivity and efficiency?

If production increases, does efficiency also increase?

What other areas of effective plant management can impact productivity and efficiency?

Solution Preview

Productivity, in business terminology and according to Investopedia, is a measure of a unit of output divided by a unit of input. Input is calculated by determining costs of labor, materials and overhead, including capital. Output is determined by revenues, inventory, and similar received assets. It is also more difficult to determine productivity in a service business compared to a goods producing business.

Efficiency, also according to Investopedia, is a level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs.

While productivity is a measurement, efficiency is a goal oriented process that compares different levels of productivity in an effort to find the best one.

If production increases, efficiency does not necessarily also increase. As a ratio, production can increase along with the increase of ...

Solution Summary

Productivity and Efficiency in Plant Management are similar, but not the same. One can improve while the other remains the same. There is a variety of activities that can improve both functions.

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