Measurement of productivity: - For measurement of productivity, one must find out input and output of the system. To measure the input resources and goods or services supplied is a critical job as they are varying nature.
To compare output and input, the better method is to convert both into money terms. So in general productivity of firm can be measured from following equation.
Thus productivity can be measured either on aggregate basis or on an individual basis. If individual input resource is considered, the output is compared with any one of the input resource. Some of these are given below.
Labour Productivity:
In case of labour productivity input and output can be measured in terms of money or in terms of man hour.
a. In terms of money,
Material Productivity:
i. Material consist of direct material and indirect material, Direct material means which goes with the product and indirect material means other consumable like fuel, chemicals in heat treatment, cutting tools, coolant etc. Material productivity measures in terms of goods produced.