Operations Data

• Labour productivity calculations can be used by the operations department to calculate how much an employee produces, which is particularly useful for labour-intensive businesses.
• Labour productivity is the output per period of time divided by the number of employees in that period.

• For example, if a takeaway produced 3,000 meals in one week and had 7 full-time staff, labour productivity is 3,000 divided by 7, which gives 428.6 meals per employee per week. This can be compared to previous years and competitor data to assess performance and inform target setting.

• Unit cost calculations are useful for the operations department because unit cost figures can be used to compare the production cost per unit against other departments, competitors or between years.
• Unit cost is total costs divided by units produced.

For example, if a clothing factory created 3,500 t-shirts at a total cost of £10,500, unit cost is £10,500 divided by 3,500 units which gives a unit cost of £3. This can be compared to previous years and competitor data to assess performance and inform target setting.

• Capacity calculations are useful for the operations department so that a business understands its maximum output level.
• Capacity utilisation calculations are useful for the operations department so that a business can work out what percentage of its maximum output is actually being used.
  • Capacity utilisation is the total output divided by total capacity multiplied by 100 as it expressed as a percentage.

• For example, if a football stadium had 9,500 seats and only 7,500 seats were occupied, capacity utilisation is 7,500 / 9,500 × 100 which gives 78.95%. A business may aim to increase its capacity utilisation to spread its fixed costs over more units, however, it is unlikely to aim for 100% as this would remove any flexibility to accept special orders or for mistakes made.