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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) cwith 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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