Productivity can be improved by increasing the amount of output for the same amount of input or by decreasing the amount of input for the same amount of output -Elucidate the statement.

 Productivity is an overall measure of the ability to produce a good or service. More specifically productivity is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity and quality. Productivity may also be defined as an index that measures output relative to the input. As such it can be expressed as: output/input.

Hence there are two major ways to increase the productivity increase the numerator or decrease the denominator. of course a similar effect would be seen if both input and output increased but output increased faster that input or if input and output decreased but input decreased faster than output.

Productivity is essentially the efficiency in which a company or economy can transform resources into goods potentially creating more from less. Increased productivity means greater output form the same amount of input.

Increased output for the same input : In this strategy the output is increased while keeping the input constant. Let us assume that in a steel plant the layout of the existing shops is not proper. By slighting altering the location of the billet making section bringing it closer to the furnace which produces hot metals the scale formation at the top of the ladles can be reduced to a greater extent. The molten metal is usually carried in ladles to the billet making section. In the long run this would give more yields in terms of tons of billet produced . In this exercise no extra cost involved. The only task is the relocation of the billet making facility which involves insignificant cost. So this is an example where output is increased without any appreciable increase in the input.

Decreased input for the same output: In this strategy the input is decreased to produced the same output. Let us assume that there exists a substitute raw materials to manufacture a product which has the required properties and available at a lower price. If we can identify such material and use it for manufacturing the product then certainly it will reduce the input cost. so naturally the productivity ratio will increase because of the decreased input by way of using the cheaper raw material to produce the same output.