Productivity – Page 2 – The OM Blog by Heizer, Render, & Munson

OM in the News: The Bad News About Productivity and Technology

American middle class wages haven’t been rising as rapidly as they once were, and a slowdown in productivity growth is probably an important cause, reports The New York Times (March 6, 2016). In mature economies, higher productivity typically is required for sustained increases in living standards, but the productivity numbers in the U.S. have been mediocre. Labor productivity has been growing at an average of only 1.3% annually since 2005, compared with 2.8% annually in the preceding 10 years. As we point out in Chapter 1, without improving productivity growth, living standards will continue to lag.

Not everyone views the situation this way. Marc Andreessen, the Silicon Valley entrepreneur, says information technology is providing significant benefits that just don’t show up in the standard measurements of productivity. (Consider that consumers have access to services like Facebook, Google and Wikipedia free of charge, and those benefits aren’t fully accounted for in the official numbers). This notion — that life is getting better, often in ways we are barely measuring — is common in tech circles.

Until recently, this debate was inconclusive. It consisted mainly of anecdotes, with individuals describing how important advances like the Internet were — or were not — to them personally. But a new U. of Chicago study has looked more scientifically at the evidence and concluded that the productivity slowdown is all too real. Basically, the productivity slowdown has led to a cumulative loss of $2.7 trillion in gross domestic product since 2004; that is how much more output would have been produced had the earlier rate of productivity growth been maintained. Arguably the Internet brought its biggest gains in the 1990s, and in those years measured economic productivity was in fact very high. But America’s productivity crisis is real. While information technology remains the most likely source of future breakthroughs, Silicon Valley has not saved us just yet.

Classroom discussion questions:

What are the problems in trying to measure productivity?
Is Andreessen correct?

OM in the News: U.S. Productivity–Is It Missing or in Hiding?

I always start my OM course with a discussion of why productivity is so important. As The Wall Street Journal (July 17, 2015) writes: “Productivity matters, because at a 2% annual growth rate, it takes 35 years to double the standard of living; at 1%, it takes 70. Low productivity growth slows the economy and holds down wages.” For well over a century, we have been able to increase productivity at about 2.5% per year. But for a decade, economic output per hour worked—the federal government’s formula for productivity—has barely budged. Over the past two quarters, in fact, it has fallen. Sluggish productivity is raising alarms all the way to Federal Reserve Chairwoman.

Silicon Valley economists, though, say productivity means giving people and companies tools to do things better and faster. By that measure, there is an explosion under way, thanks to the gadgets, apps and digital geegaws spewing out. Consider the efficiency of hailing a taxi with an app on your mobile phone, or finding someone who will meet you at the airport and rent your car while you’re away (a new service in San Francisco). Add in online tools that instantly translate conversations or help locate organ donors. They also make the U.S. more productive, don’t they?

In 1987, during the last period of productivity hand-wringing, Nobel economist Robert Solow quipped: “You can see the computer age everywhere but in the productivity statistics.” From 1995 to 2004, it finally looked like the digital age was paying off: Productivity growth rates closed in on 3%; since 2010, they have dipped below 1%. Yet in Silicon Valley, the idea of a productivity slowdown seems ridiculous to technologists. At the heart of their argument is the free and invaluable Internet search, cutting short the time to, say, learn how to grow geraniums or find the best Mexican restaurant. Many economists question why productivity measures can’t capture the full benefit of improved products and services, such as a refrigerator that signals when the milk is getting low.

Classroom discussion questions:

1. Why is productivity so important to citizens and to nations?

2. How can productivity be increased at, say, the Post Office?

OM in the News: Weak Productivity Turns into a Problem of Global Proportions

“Output per worker grew last year at its slowest rate since the millennium, with a slowdown evident in almost all regions, underscoring how the problem of lower productivity growth is now taking on global proportions,” reports The Financial Times (May 25, 2015). Globally, the rate of growth decelerated to 2.1% in 2014, compared with an annual average of 2.6% between 1999 and 2006.

As we write in Chapter 1, the problem of low global productivity as one of the greatest threats to improved living standards, in rich and poor countries alike. The fact that companies have become less efficient at converting labor, buildings and machines into goods and services is beginning to trouble policy makers around the world. Janet Yellen just cited weak US productivity as a cause of “the tepid pace of wage gains in recent years.”

Raising productivity is seen as one of the only ways to improve living standards, at a time when advanced and some emerging economies are seeing aging populations and a rapidly increasing retirement rate. Without stronger productivity growth, the world may have to get used to much lower rates of economic growth. Emerging markets are reaching the limits of easy growth based on catch-up technology while advanced economies are concentrating on services, which tend to have less scope for rapid efficiency gains.

New technology has centered on consumer products, which have made people better off and able to do more than in the past, but have not necessarily improved the quantity or efficiency of their work. There is little evidence the slowdown stems from lazy or inefficient employees. “Something is going wrong with the way firms are equipping their workforces to produce more,” says the head of the Conference Board.

Classroom discussion questions:

1. What is the definition of productivity?
2. What is the impact of technology on manufacturing productivity? On service productivity?

Good OM Reading: The Productivity Challenge

Global economic growth is set to slow dramatically

“Over the past 50 years,” writes McKinsey’s Global Initiative Report (Jan., 2015), “global economic growth was exceptionally rapid.” The world economy expanded sixfold. Average per capita income almost tripled. Hundreds of millions of people were lifted out of poverty. Yet unless we can dramatically improve productivity, McKinsey thinks the next 1/2 century will look very different. The rapid expansion of the past five decades will be seen as an aberration of history, and the world economy will slide back toward its relatively sluggish long-term growth rate.

The world isn’t running out of technological potential for growth. But achieving the increase in productivity required to revitalize the global economy will force business owners, managers, and workers to innovate by adopting new approaches that improve the way they operate.

McKenzie found that about 3/4 of the potential productivity growth comes from the broader adoption of existing best practices, or catch-up improvements. The remaining 1/4 comes from technological, operational, or business innovations that go beyond today’s best practices and push the frontier of the world’s GDP potential. Efforts to improve the traditionally weak productivity performance of the large and growing government and healthcare sectors around the world will be particularly important.

Business must play a critical role: aggressively upgrading capital and technology, taking risks by investing in R&D and unproven technologies or processes, and mitigating the labor pool’s erosion by providing a more flexible work environment for women and older workers, as well as training and mentorship for young people. In an environment of potentially weaker global economic growth, and definitely evolving growth dynamics, executives need to anticipate where the market opportunities will be and the competitors they will meet in those markets. Above all, companies need to be competitive in a world where productivity will increasingly be the arbiter of success or failure.

Good OM Reading: Can Parking Behavior Predict Productivity Gains?

One of the well-known experimental studies of people’s behavior is the “Stanford marshmallow experiment” in 1970 in which children were put in an room and given the following instructions: they are given one marshmallow and can eat it immediately; however, if they wait for 15 minutes without eating it, they will receive another marshmallow. The most interesting finding is that more than 10 years later, the children who resisted the temptation to eat immediately and earned the second marshmallow “were significantly more competent” and achieved higher SAT scores. In general, people who exhibit the ability to delay gratification tend to do better in career and life.

And every once in a while, we come across an academic journal article that is equally fascinating. The concept is that at the macrolevel, a metric that measures the overall effort of delaying gratification across economies would better gauge or explain economic growth differences across countries. Prof. Shaomin Li, at Old Dominion U., proposes a novel metric in his fascinating article in The International Journal of Emerging Markets (No. 4, 2014): the way that people park their cars.

Back-in parking takes more time and effort than head-in parking. Yet, it is easier, quicker, and safer when exiting. Thus Li conjectures that people who take the trouble to back in demonstrate the ability to delay gratification; they want to invest more time and effort now so that they can enjoy the fruits of their labor later. They demonstrate a culture of long-term orientation. Such behavior, says Li, should be positively associated with taking time to study, saving more money and working harder in order to enjoy life later, a trait that contributes to national productivity gains and economic growth. The table summarizes the analysis.

OM in the News: Looking Back–and Forward–on Productivity

Frederick Taylor revolutionized manufacturing at the turn of the 20th century with a simple insight. Most manufacturing work was a sequence of physical motions. You would load coal onto a shovel, carry it to a furnace, throw it into the furnace, walk back to the coal pile and repeat. In a time and motion study, he quantified each step and how long it took. Then he analyzed how to improve the whole process. He noted, for example, that a typical worker could lift 21 pounds for maximum efficiency. Workers varied in size and strength, but on average this weight balanced the number of shovel lifts per minute against the volume per lift. In those early days, workers used the same shovel for all materials, regardless of the density of the stuff being lifted, so less weight was being lifted for the less dense materials. Taylor’s elegant and simple solution — bigger scoops for shovels used to haul the less dense materials — illustrates how careful analysis of a specific work process can increase productivity.

Today, his time and motion studies seem antiquated. Phone calls and memos have replaced shovels and picks for many workers. “Yet despite its association with early factories, a modern version of the spirit of Taylorism is sorely needed,” writes Harvard’s Prof. Sendhil Mullainathan in the New York Times (Sept. 28, 2014). “It’s time to identify and optimize the specific psychologies that constitute the mental alchemy of productivity,” he says.

In one Stanford experiment, some workers were randomly assigned to work at home, others worked in group call centers. The work habits of both groups were carefully monitored electronically, and the workers knew it. Those working at home were 13% more productive than those in call centers. With modern technology, we now have so many ways to quantify, track and motivate productivity, and are just beginning to scratch the surface of doing so.

Classroom discussion questions:

1. Why is productivity such an important issue in OM?

2. Describe how time and motion studies are conducted (see Chapter 10).

OM in the News: The Downside of Increasing Productivity

“What has happened in agriculture over the past century is remarkable,” writes Harvard Prof. Larry Summers in The Wall Street Journal (July 8, 2014). The share of American workers employed in agriculture has declined from over 1/3 a century ago to 1-2% today. Why? Because agricultural productivity has risen spectacularly, with mechanization reducing the demand for agricultural workers even as food is more abundant than ever. What has happened in agriculture is happening to much of the rest of the economy.

In Marc Andreessen’s phrase, “Software is eating the world.” Already the number of Americans doing production work in manufacturing and the number on disability are comparable. Despite an expected uptick in the next few years in manufacturing employment, the long-term trend is inexorable and nearly universal. As in agriculture, technology is allowing the production of far more output with far fewer people. No country can aspire to more of an increase in competitiveness than China, yet even it has suffered a decline in manufacturing employment over the past 2 decades. And the robotics and 3-D printing revolutions are still in early stages.

What about services? A generation from now, Summers thinks taxis will not have drivers; checkout from any kind of retail establishment will be automatic; call centers will have been automated with voice-recognition technology; routine news stories will be written by bots; counseling will be delivered by expert systems; financial analysis will be done by software; single teachers will reach hundreds of thousands of students, and software will provide them with homework assignments customized to their strengths and weaknesses.

Those losing jobs due to increased productivity will be freed up to do things in other sectors. But there are many reasons to think the software revolution will be even more profound than the agricultural revolution. This time around, change will come faster and affect a much larger share of the economy. Workers leaving agriculture could move into a wide range of jobs in manufacturing or services. Today, however, there are more sectors losing jobs than creating jobs.

Classroom discussion questions:

1. What are the OM implications of Summers’ article?

2. What do you think American manufacturing will look like in 20 years?

OM in the News: Productivity and Technology Down on the Farm

An Iowa farmer using tractor-mounted computers to help make decisions about planting crops

We are fully aware that few of our students will be entering jobs in agriculture (see Figure 1.5 in Chapter 1 for employment figures in the U.S. manufacturing, service, and farm sectors). Yet this Wall Street Journal (Feb. 26, 2014) article on the next revolution on the farm is still worth sharing with your class. The revolution will come from feeding data gathered by tractors and other machinery into computers that tell farmers how to increase their output of crops like corn and soybeans.

Monsanto, DuPont, and other companies are racing to roll out “prescriptive planting” technology to farmers across the U.S. who know from years of experience that tiny adjustments in planting depth or the distance between crop rows can make a big difference in revenue at harvest time. Many tractors and combines already are guided by Global Positioning System satellites that plant ever-straighter rows while farmers, freed from steering, monitor progress on iPads and other tablet computers now common in tractor cabs. The same machinery collects data on crops and soil. But many farmers have haphazardly managed the information, scattered in piles of paperwork in their offices or stored on thumb drives clattering in their pickup truck ashtrays.

Algorithms and human experts crunch all the data and can zap advice directly to farmers and their machines. Supporters say the push could be as important as the development of mechanized modified seeds in the 1990s. Data-driven planting advice to farmers could increase world-wide crop production by about $20 billion a year, or about one-third the value of last year’s U.S. corn crop. The technology could help improve the average corn harvest to more than 200 bushels an acre from the current 160 bushels. Such a gain would generate an extra $182 an acre in revenue for farmers.

Classroom discussion questions:
1. Why are farmers concerned about Monsanto’s involvement?

2. How has productivity improved over the past decades on farms?

Guest Post: A Class Exercise Relating Productivity and the Olympics

Howard Weiss is Professor of Operations Management at Temple University. He has developed both POM for Windows and Excel OM for our text

When I teach productivity, I like to explain to the students that while output/input seems simple, it can be difficult to assess. The Heizer/Render textbook includes multifactor productivity (Chapter 1) where the multiple factors are all inputs, and I like to ask my students to take it a step further.

There are many web sites that list the Olympic medal count for any Olympics. I show my students the top medal-winning countries from one of the more recent Olympics, such as those listed at http://en.wikipedia.org/wiki/2012_Summer_Olympics_medal_table.

When I am in the classroom I ask my students, “What information would you want in order to answer the question, “Which of the 5 countries shown below was the most productive in the 2012 Olympics?” This raises many interesting issues. Students will discuss the different inputs that might be used such as population, dollars spent training the Olympians and number of athletes competing. Some students will note that different outputs can be used. For example, outputs could be total medals or a weighted average of gold, silver and bronze medals. For the 2012 Olympics, I point out that based on the sorting in Wikipedia, it is using only gold measures, as its output measure as can be seen when comparing Great Britain and Russia or South Korea and Germany.

I also ask the students to find websites that list the countries in a manner that we would call productivity. This web site has a graph of the top 8 countries based on medals per athlete while this one includes the inverse of productivity in its table on athletes per medal.

The students generally find this to be a fun exercise and appreciate that inputs and outputs may not be as simple as one might think. In the course of searching for Olympic productivity on web sites, they also find sites that are interesting even though the site does not answer the productivity question. One example is this site, which explains that American workers are less productive during the Olympics. Finally, the exercise was very timely this past week since the Olympics are currently going on.

OM in the News: Harley-Davidson’s Manufacturing Strategy

“Before the great recession, Harley-Davidson didn’t have to worry about counting the seconds,” writes The New York Times (Feb. 2, 2014). There was little competition for their core customers — “fat white guys,” as one employee called them. Harley charged a huge premium for its bikes, and its customers waited as long as 18 months to receive them. The union rep at Harley’s York plant said workers could assemble motorcycles at their own pace, music blaring. “We had 30% absenteeism every Monday and Friday,” added the plant manager. This all worked fine until the recession, when the company was close to collapse.

Many firms respond to global competition by breaking their unions, by moving to a right-to-work state (or out of the country), and by employing robots on the assembly line. But Harley has an “American blue-collar, working man” brand, and to get rid of its union or to make its motorcycles in Mexico would have been catastrophic. The company could only compete by redesigning the production system so that each worker created more value than they cost. So Harley tore down the existing plant and built a new one. Unlike most factories, the new plant has people everywhere. There are no robots on the main assembly line; instead, hundreds of workers, operating in teams of 5 or 6, manually build each motorcycle. There are around 1,200 different Harley configurations, and a new bike starts its way through the production line every 80 seconds. Virtually each one is unique.

Human beings can also solve thorny problems that lead to major inefficiencies. At Harley, there are 150 “problem solvers” whose entire job is to continuously monitor their small sections of the production line and search for better ways to make motorcycles. The average tenure of a line worker at the York plant is 18 years, and these workers are extremely devoted to the company. (“How many factory workers have the company logo tattooed on their arm?” asks the plant manager.) Costs have fallen by $100 million at the plant and quality has improved even more significantly. Customer demand is extremely high, especially now that people can get a bike within a few weeks.

Classroom discussion questions:

1. What type of production process does Harley use? (See the Global Company Profile that opens Ch. 7).

2. Why does Harley prefer people to robots?

OM in the News: The Bone Factory

Blood is everywhere in JBS’s vast slaughterhouse in Greeley, Colo., reports BusinessWeek (Sept. 23-29, 2013). It’s puddled on concrete floors, smeared on workers’ smocks, gushing from cattle knifed on the killing floor. The smell hangs on the air in a high-ceilinged room, where JBS employees toil at chopping tables along a conveyor belt. With hooks in one hand and knives in the other, they trim fat and pare as much muscle from the bone and vertebrae as they can, turning raw slabs into tenderloins and New York strips.

“Disassembly” lines like this one, relying not on robots but humans, are where JBS and other meatpackers make money. Profit margins are slim in the meat business. Rivals buy essentially the same livestock, fatten them on the same feed, and hope to whittle extra scraps of profit by being the most efficient at turning carcasses into salable cuts. “Humans have not invented a machine that can debone a cow or a chicken as efficiently as a human being,” says a JPMorgan analyst.

Each day, the Greeley plant’s 3,200 workers can slaughter and debone 5,400 head of cattle, producing 3.3 million pounds of meat. Beef expertly cut from the bone can fetch $10 a pound at retail, while leftover scraps get 1/10 of that, quickly adding up to a lot of lost profit.

JBS spends heavily on training and equipment to improve the yield. A steer or heifer can yield 72% of its gutted weight. Further, the company also installed overhead screens that flash numbers indicating whether workers are meeting yield targets. Progress is also measured in bones: the clean, white skeletal fragments are tossed into baskets behind the disassembly line, where supervisors count how many each line worker is detaching. Top producers wear black hats and get paid more.

Classroom discussion questions:

1. How does the disassembly line differ from an assembly line?

2. Why is productivity so important at JBS?

OM in the News: The Rise of American Manufacturing

A US that’s a world beater on manufacturing costs?

It could be, according to the just published Boston Consulting Group (BCG) report (discussed in The Wall Street Journal, Aug. 30, 2013), about how the U.S. is fast becoming one of the developed world’s lowest-cost manufacturers. The report details how declining energy costs—the result of the shale boom—are giving the U.S. a greater competitive edge globally. As seen in the graph, this translates to a double-digit percentage advantage in key costs by 2015. “The trends are accelerating,” says BCG.

U.S. manufacturing is becoming so cost competitive that by the end of the decade it will grab away $70 billion to $115 billion in annual exports from other countries—products that will be made in the U.S. and shipped abroad. The losers: chiefly Europe and Japan. Add to this some manufacturing that will be “reshored” from China, and the U.S. could gain up to 5 million new jobs, including service jobs, BCG forecasts.

Productivity gains in the U.S. are another tailwind. BCG looked at 8 low-cost states, primarily in the Southeast, to which manufacturing is already gravitating. Adjusted for productivity, average labor costs by 2015 will beat Japan by 18%, Germany 34%, and France 35%.

The study helps explain why Dow Chemical this week confirmed it will expand its manufacturing operations in Texas and Louisiana, and why scores of other companies—from Siemens to Toyota to Michelin—are expanding U.S. production, too. More than a year ago, Siemen’s CEO stated that cheap energy in the U.S. was already a game changer—the biggest competitive advantage the U.S. has gained in decades. The wholesale price of natural gas in the U.S. has dropped by half since 2005, cutting the cost of feedstock and fuel. By comparison, natural gas costs 2.6 to 3.8 times more in Europe and Japan.

Discussion questions:

1. What factors are helping turn around US manufacturing?

2. Propose an alternative, more pessimistic, view–and defend that position.

OM in the News: Detroit’s Last Car Plant Standing

The last auto plant in Detroit generates $2 billion in annual profit for Chrysler

There is a section of Detroit that sums up the city’s decline, a grim landscape of boarded-up stores, abandoned homes and empty lots that stretch all the way to the river. And in the middle of it stands one of the most modern and successful auto plants in the world. More than 4,600 workers staff Chrysler’s sprawling Jefferson North factory nearly around the clock, writes The New York Times (July 16, 2013), making one of the most profitable vehicles on the market, the Jeep Grand Cherokee.

“Everything is aligned there,” said one auto analyst. “You have a hot-selling, high-profit vehicle, a flexible labor agreement and a facility that the company has invested in instead of abandoned.” Annual production has skyrocketed from fewer than 100,000 vehicles a year in 2009 to more than 300,000. And a work force that had dwindled to 1,300 people has more than tripled. In June, Grand Cherokee sales rose 33%, as buyers paid as much as $50,000 for the model.

The profits and productivity at Jefferson North put it on par with the most efficient luxury car plants in Germany and the best factories operated by Japanese automakers in the southern US. Today, Jefferson North stands as the last auto assembly plant in Detroit’s city limits, which once had nearly a dozen of them.

The company has taken advantage of the groundbreaking 2007 labor agreement with the United Automobile Workers union, to bring on new employees at an entry-level wage under $16 an hour, compared with the $28 earned by longtime union workers. Since its bankruptcy, Chrysler has hired two full shifts of new workers, over 2,200 people, at the lower wage.

Discussion questions:

1. Why is this plant successful?

2. What operations decisions have helped Chrysler?

OM in the News: Manufacturing’s Mirage

These are good times for Libbey, a 125-year-old American glassmaker that nearly went bankrupt 4 years ago, reports The New York Times (April 2, 2013). Its sales are at a record high and its energy-intensive factories saved more than $5 million in 2012 as natural gas prices fell. Despite all the upbeat news, however, Libbey recently announced it would lay off 200 workers at its Louisiana plant. Libbey’s decision is just one example of why manufacturing is likely to fall far short of the claims that millions of new factory jobs are about to be created in the U.S. because of the unlocking of abundant supplies of domestic energy.

“Even though the U.S. is more competitive globally, manufacturing doesn’t give you the kind of direct job creation it did in years past,” says one expert. “At the end of the day, there aren’t as many people on the factory floor.” Indeed, while the sector has added 500,000 jobs since the recession ended and the value of what the nation’s factories churn out is close to a high, there are nonetheless 2 million fewer manufacturing workers today than in 2007. The share of jobs in manufacturing has been on a nearly uninterrupted downward slope for 50 years, now accounting for less than 9% of all employment.

A recent study by the American Chemistry Council (ACA) estimated that increased gas production could create 200,000 jobs in the broader manufacturing sector, including several thousand in the glass industry. “It’s resulting in a renaissance in manufacturing,” says their economist. But glass industry veterans say cheaper natural gas isn’t a game changer in terms of jobs, however beneficial the cost savings are. Pressure from inexpensive imports remains intense, and labor in Mexico and China is still cheaper than here.

Other industries identified by ACA as potential winners from the energy boom, like paper producers and foundries, have continued to lose jobs. But nearly all of the U.S. manufacturers that survived the lean years of the last decade are globally competitive companies that depend on high productivity and advanced technology for their success more than masses of assembly line workers.

Discussion questions:

1. Will manufacturing job levels ever return to the 1960s levels? Why?

2. Which is more important–job creation or productivity?

OM in the News: Productivity Increases Are Driving the Trucking Industry

Average distance travelled by trucks is declining because of increased productivity

The road ahead for the nation’s 18-wheelers is shrinking, reports The Wall Street Journal (March 21, 2013), as rising fuel, driver and equipment costs have led shippers to devise ways to operate more efficiently. Truckers are driving fewer miles, allowing operators to squeeze more years out of vehicles already on the road and lessening the need to buy new trucks or expand fleets. While railroads have taken some freight from long-distance truckers, greater productivity is having a bigger impact. Lighter weight and smaller packages, better routing and fewer empty trucks on the road have affected productivity. Last year, the average distance traveled by tractor-trailers in the U.S. fell to 110,614 miles, a 12% decline from the late 1990s.

“We’ve been working through a period of super-productivity gains in trucking,” says the president of ACT Research. “Everybody has been trying to take costs out of transportation. If your productivity is strong enough, you don’t need a lot of new trucks.”

Hillyard Inc., for example, a Missouri cleaning products manufacturer, clocked 2.8 million miles of driving last year with its 21 trucks. But less than 10% of those miles were with empty trailers, compared with 25% four years ago. Increased use of smart phones has improved Hillyard’s ability to locate drivers on the road and dispatch them on the fly to pickup and delivery sites. “Nobody makes money sitting still,” says the firm’s transportation manager. “We’re doing more work with the same amount of trucks.”

This leaves truck makers pinning their hopes on more fuel-efficient vehicles to stimulate replacement demand. A loaded tractor-trailer typically uses a gallon of fuel every 5-6.5 miles. Getting just 1 mpg more saves thousands of dollars a year on the fuel cost for a single truck. Cummins and Peterbilt are developing a new model getting 10 mpg, using a high-efficiency engine and a more aerodynamic trailer and cab that reduce wind drag.

Discussion questions:

1. Using Equations (1-1) and (1-2) in Chapter 1, what are the productivity factors (inputs and outputs) in this story?

2. Why is productivity in trucking such an important OM issue?