Analysing operational performance

Question 1

What is labour productivity?

Answer 1

The output per worker during a specified period of time.

Question 2

How do you calculate labour productivity?

Answer 2

Output over a period of time/number of employees

Question 3

Why do businesses aim to increase the level of productivity?

Answer 3

To improve competitiveness:

Question 4

What are unit costs?

Answer 4

The average cost of producing one unit of output

Question 5

How do you calculate unit costs?

Answer 5

Total costs/number of units of output

Question 6

As output increases, do unit costs rise or fall and why?

Answer 6

Fall as the fixed costs are spread across more units of output.

Question 7

What is capacity?

Answer 7

The volume of products that a business is capable of producing at a given time with it’s available resources.

Question 8

What are factors that determine capacity?

Answer 8

1. Buildings and space
2. Equipment and technology
3. Number and skills of workers
4. Supplier reliability
5. Available finance
6. Expected demand
7. Seasonal factors