Respond to classmate repsonse on question: Why a firm must measure productivity? Find a specific business and discuss the productivity measures and importance of productivity measurement in evaluating operations performance. Indicate the output/input measures of productive efficiency.

Classmate Response:

All businesses require measurable indicators to calculate productivity rates influenced by marketing strategies to create profits and mitigate loss. It doesn’t matter if the company is in the manufacturing, retail, or service industry because all businesses operate for profit. To operate profitably, an enterprise must adopt the formula that profits equal outputs greater than inputs. There are strategies developed to interpret economic performance markers—otherwise known as productivity measures. And, these measure business efficiency and overall profitability (“Canada,” 2006).

There are various types of productivity measures (“Canada,” 2006)

Single-factor productivity (SFP) measures output quantity, such as the number of manufactured units.
Labor productivity (LP)which measure output rate to labor input. E.g., total hours worked to product output.
Multifactor productivity (MFP) combines inputs like capital, labor, and materials used to produce output.
Total factor productivity (TFP) measures the total productivity output calculated against the total average productivity inputs. E.g., The average work hours, quantity of material and overhead cost to produce a measured output.

Delta Airlines is one of the world’s top three airlines by revenue passenger miles (Gay, n.d.). Delta calculates the minimum number of seats (service capacity level) per flight hour needed to profit. The calculations need to overcome landing and gate fees, jet fuel, leasing, aircraft maintenance, and labor cost while remaining competitive (Gay, n.d.) Because of its myriad of varying factors, Delta must use computers to develop matrix algorithms to calculate profitability using various productivity measures in a very competitive market. That is extremely critical as the commercial aviation industry remains hamstrung in this economy.

References:

Gay, C. (n.d.) Delta climbs to no. 2 largest U.S. airline. Delta News Hub. Retrieved from https://news.delta.com/delta-climbs-no-2-largest-us-airline

Lipsey, R. & Nakamura, A. Services Industries and the Knowledge-based Economy. (2006). Maldives: University of Calgary Press.