Question

a) "Partial Productivity" is deemed very useful than the "Total Productivity". Give your opinion stating the reasons.

b) What is productivity gain by displacement?

Answer 1

a) Before stating the opinion, it is important to first understand what these terms mean.

Partial Productivity- It is defined as the relationship between the output and the single input of the production. Let's take an example – if there is an increase of 10% rise in labor. The impact that the increase in labor will exhibit can be shown by partial productivity.

The formula to calculate partial productivity can be given as:



The benefits of partial productivity can be underlined below:

• It is easier to calculate as it does not take into account other inputs.
• It helps in identifying the different areas where any kind of improvement is required

The limitations of partial productivity can be underlined below:

• The results can be misleading if not used in the right context
• The overall impact of the inputs on the output can not be shown

Total Productivity- It is defined as the combined effect of all the resources used in the production of goods and services and divided by the output. These ratios provide the most inclusive type of index for measuring productivity and may be preferred in making comparisons of productivity.

Thus, it can be inferred that "Partial Productivity is deemed very useful than the Total Productivity" as the later one does not show the interaction between each input and output separately and are thus too broad to be used as a tool for improving specific areas.

b) Before understanding the productivity gain by displacements, let us understand how to calculate the productivity gain:

1. Calculate current productivity (Productivity 1 = Output / Input)
2. Improve areas of productivity
3. Calculate productivity after improvements (Productivity 2 = New Output / New Input)
4. Subtract the old productivity from the new productivity (Productivity 2 - Productivity 1 = Productivity Gain)
5. Divide the productivity improvement rate by the old productivity rate and multiply by 100 (Productivity Gain / Productivity 1 x 100 = % Gain)

Now by using the productivity formula, you can measure the effectiveness of changes you implement to production processes or business practices. When you use the productivity formula to calculate productivity increases after implementing changes such as these, it can help you make continuous improvements to your business. Thus productivity gain by displacement can be calculated by using the formula and inputting the values of productivity before and after the labor displacement.