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CMA Intermediate · Operations Management and Strategic Management · Productivity Management and Quality Management

Sharma Textiles produced 5,000 metres of cloth worth Rs 50 per metre. Inputs were: labour Rs 60,000, materials Rs 100,000, energy Rs 40,000 and capital Rs 20,000 (all for the same period). What is the total-factor productivity?

Total-factor productivity is output value divided by total input cost: Rs 250,000 divided by Rs 220,000, giving about 1.14. The figure 1.25 results only if some inputs are left out.

  1. A1.00
  2. B1.14
  3. C1.25Correct
  4. D0.80

Explanation

Output value = 5,000 x 50 = Rs 250,000. Total input = 60,000 + 100,000 + 40,000 + 20,000 = Rs 220,000. Productivity = 250,000/220,000 = 1.136, which is about 1.14. Check: 220,000 x 1.136 = 250,000. The 1.25 option arises from omitting capital and energy wrongly.

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