An internal study at Mimeo Corporation-a manufacturer of low end photocopiers-revelaled that each of its workers assembles 3 photocopiers per hour and is paid $3 dollars for each assembled copier. Although the company does not have the resources needed to supervise the workers, a full time inspector verifies the quality of each unit produced before a worker is paid for his or her output. You have been asked by your supervisor to evaluate a new proposal designed to cut costs. Under the plan, workers would be paid a fixed wage of $8 per hour. Would you favor the plan? Explain.
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The success of the plan depends on the current average rate of defective assemblies produced per day by an employee. If this rate is 2 or below, then the new proposed plan is favorable. However, if the average number of defective items per day per employee is above 2, then it is better to ...
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