The Productivity Challenge
Student Tip 
Why is productivity important? Because it determines our standard of living.
The creation of goods and services requires changing resources into goods and services. The more efficiently we make this change, the more productive we are and the more value is added to the good or service provided. Productivity is the ratio of outputs (goods and services) divided by the inputs (resources, such as labor and capital) (see Figure 1.6). The operations manager’s job is to enhance (improve) this ratio of outputs to inputs. Improving productivity means improving efficiency.1
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