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SSG 318 Module 2

Industrial engineering and it’s basis

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Samuel Anaekwe
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14 views33 pages

SSG 318 Module 2

Industrial engineering and it’s basis

Uploaded by

Samuel Anaekwe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SSG 318 : INDUSTRIAL ENGINEERING

MODULE TWO: Basis Concepts of Economic Analysis And Productivity


Economic Concepts
• Economics :social science dealing with the study of how people satisfy seemingly
unlimited and competing wants with the careful use of scarce resources

• Scarcity
• Opportunity Cost & Trade-Offs
• Productivity

• scarcity
• fundamental economic problem of meeting people’s virtually unlimited wants
with scarce resources. Because of scarcity, society needs to decide how to
distribute limited resources to satisfy seemingly unlimited wants and needs
Trade-offs and Opportunity Costs All economic decisions require us to
make choices among alternatives. Trade-offs are all the available
alternatives. The opportunity cost is the next-best alternative we give up
• want
• something we would like to have but is not necessary for survival

• need
basic requirement for survival, including food, clothing, and shelter

• entrepreneur
• risk-taking individual in search of profits

• resource
• any available means for economic or political development
Terms
• gross domestic product (GDP)
• dollar value of all final goods, services, and structures produced within a
country’s borders during a one-year period

• wealth
• sum of tangible economic goods that are scarce, useful, and transferable
from one person to another

• standard of living
• quality of life based on ownership of necessities and luxuries that make life
easier
• Adam Smith (1723–1790)
• introduced the idea that the division of labor led to the great prosperity of
Britain
• defined the wealth of a nation as the sum of the goods produced by its
people
Productivity
Productivity?
• appears differently to different people.
Economist measure it with GNP ( Gross National Product)
Manager ----Cost cutting and higher rate
Industrial Engineer ------more output per hour
Accountant/ Auditor / Finance Specialists: Financial ratio, budgetary variance, Standard of
living, Trade balance deficit, Unemployment, Exchange rate,……

• Standard of living: Degree of material well – being available to person, class or community that is
necessary for sustaining and enjoying life.

• Requirement for SL: Food, Clothing, Shelter, Security and Essential services like drinking Water,
sanitation, Medical and education
• Ways to improve SL, is to increase employment and increase Productivity

Concepts: productivity is efficiency in production: how much output is obtained from a set of inputs
𝑜𝑢𝑡𝑝𝑢𝑡
• Productivity =
𝑖𝑛𝑝𝑢𝑡

• Ability to measure and analyse productivity is difficult b/c of variety of input.

• More attention is focused on better mgt. of output neglecting the input, hence need for IE to
understand the concept of productivity. i. e vivid understanding to provide basis for measurement,
analysis and improvement.

• Transition to global economy, increase in competition and standard of living consequential effects to
increase in productivity.
• Definitions

It is a function of providing more and more of everything to more and


more people with less and less consumption of resources

It is total output achieved in a given time in relation to sum of direct and


indirect efforts expended in its production

It is a measure of how well the resources are brought together in a firm and
utilized for accomplishing a set of objectives

It is concerned with establishing congruency between organizational goals


with societal aspirations through input – output relationship

It is the multiplier effect of efficiency and effectiveness


Production and Productivity

Production is a value addition process noted as a process of


transforming input into output having desired utility and quality

Production system is therefore an organized process of


conversion of raw materials into useful finished products as
shown below;
Expectation from Productivity
Reasons for Productivity Slowdown
• Deterioration in quality of Labour
Quality of education,
Demographic change,
Changing attitudes towards work

• Technological innovation retardation

• Other factors like:


Higher energy prices and shift from manufacturing to services
Productivity Measure
INFLUENCING FACTORS ON PRODUCTIVITY

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