Multifactor Productivity Calculator
Calculate MFP ratio using multiple input costs: labor, capital, materials, energy, and services
Multifactor Productivity Results
Understanding Multifactor Productivity (MFP)
What is Multifactor Productivity?
Multifactor Productivity (MFP), also known as Total Factor Productivity (TFP), measures the ratio of total output to the combined sum of multiple input costs. Unlike single-factor productivity (which measures output per labor hour), MFP provides a comprehensive view of operational efficiency by considering all major input factors.
MFP is used by economists, business analysts, and operations managers to assess overall efficiency, make investment decisions, and compare performance across organizations or time periods.
Multifactor Productivity Formula
MFP = Total Output ÷ Sum of All Input Costs
where: Sum of Inputs = Labor + Capital + Materials + Energy + Services
All values must be in the same monetary unit (e.g., USD). The resulting ratio shows how many dollars of output are generated for each dollar of combined input costs.
Input Factor Definitions
Total cost of human resources including wages, salaries, benefits, and payroll taxes
Equipment depreciation, facility rent, machinery costs, and other capital-related expenses
Raw materials, components, supplies, and inventory consumed in production
Electricity, natural gas, fuel, and other energy costs used in operations
External services like consulting, contract work, maintenance, and professional services
Advantages of MFP Measurement
- Comprehensive View: Captures efficiency across all major input factors, not just labor
- Investment Decisions: Helps determine where to allocate resources for maximum impact
- Benchmarking: Compare overall efficiency against competitors or industry standards
- Technology Impact: Measures the effect of automation and technology investments
- Cost Structure Analysis: Reveals which input factors consume the most resources
- Flexible Framework: Include only the input factors you track and want to measure