question archive A production operation is making 150 units of a product by engaging five workers for 300 hours
A production operation is making 150 units of a product by engaging five workers for 300 hours
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A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150.
To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company.
This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units.
a) Compare the productivity after Bonus with the initial productivity.
b) Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piece is £70 both before and after the scheme.
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Answer:
The productivity increased after Bonus because 40 percent of the products were defective as compared to 8 percent defective products after the scheme. Hence, the productivity increased when the faulty products were reduced by 32 percent.
Step-by-step explanation
Given : 10 units faulty out of 130 output
10unit÷130units(total output)= 0.0769
0.0769×100= 7.69 percent or 8 percent
The faulty units after the scheme went down to 8 percent from 40 percent.
Initial percentage of faulty units: 40 percent
Percentage of faulty units after scheme: 8 percent
40%-8%= 32%
The numbers of faulty units were reduced by 32% thereby increasing the productivity.
