Operations Formula

• Labor productivity

  1. Total output in a specific or given period divided by the number of employees

  2. Total number of output in a specific or given period divided by the total number of hours worked by all employees
• Labor productivity


  The bigger the number, the higher the productivity of the workforce; the lower the number, the less productive the workforce
• Unit costs

  Total cost in a specific or given period divided by the number of units produced
• Unit costs

  You want average unit costs to be as low as possible; lower cost per unit allows for competitive pricing, potentially increasing demand and revenues
• Lower average unit costs

  May lead to the ability to bring prices down, potentially increasing demand and revenues
• Capacity utilization


  Actual output in a given period divided by the maximum output
• Capacity utilization

  The higher the number, the more resources used, indicating higher efficiency; lower number means less resources used, likely less efficiency