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Mimeo Corporation - Photocopiers Manufacturers

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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 ...

Solution Summary

Detailed calculations and step by step instructions are provided along with the analysis.