Principles of Management for the Hospitality Industry by Dana Tesone

Author:Dana Tesone [Dana Tesone]
Language: eng
Format: epub
ISBN: 978-1-85617-799-3
Publisher: Elsevier Science
Published: 2010-01-15T00:00:00+00:00

Productivity Enhancement Strategies

We know that all production systems consist of three parts. There are (1) inputs that go into a (2) transformation process to render (3) outputs. Inputs consist of resources that must be acquired and allocated into the production system. All resources cost money. Direct costs are considered to be operating expenses or costs. Operating expenses include all resources that are directly used as inputs for a production system. Indirect costs are considered to be capital expenses such as physical plant costs (overhead) and equipment expenses. Outputs consist of services and products that result in sales, which generate revenues or income for the service enterprise. When we view the two ends of the production system, we see costs to the left and sales to the right of the transformation process. Hence, productivity is measured by the costs of sales. Figure 10.5 depicts the relationship between costs and sales used to measure productivity.

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