QMBD- Group-1 Assignment-3

Information provided in the case-

1. Sales figure is 220 million euros

2. Employment level is 110 for the last 10 years
3. Profit for the last year is 14480000 euros
4. Standard price regardless of the variety is 72p per unit
5. Women average is 71 units per day
6. Fair price is 80p per unit by union (@11.1% which was out of consideration)
7. Agreed increment is 8%-10%
8. Two proposals in place
1. First- Having 61 unit per person@ 72p as daily average and 10 bonus unit per
person @ 122p(72p+50p)
2. Second- Providing 79p per unit
9. HR points-
1. Union was not performing as per the expectation
2. There have been thefts
Analysis-

Average of Daily Output Y-T-D is 71

Average Daily Output this week is 69.9 (1398/20)
1. This violates the undertaken assumption which was to increase productivity through this
strategy, as the output is 69.9.
2. The bonus is provided on the basis of the last 10 units, which will be an additional to 61
average units. In case of the second proposal i.e providing 79 p it won’t increase the
productivity as there is no incentive attached to the performance.
3. The estimated value for the proposal-1 is presented to be 5612 euro, but if we consider
the year to date data it comes out to be 5192 euro.
4. The actual cost is nearly 400 euros less than that of the union demanding for work.
5. This gives an inference that there is an information gap by the union for cost estimation
of work.

*The above difference is mainly due to the fact that the union has assumed that every
employee will be performing output above 61 units.

*Whereas the actual shows not every employee is producing the stated output.

Further analysis highlights the below questions-

a. How good were the rates?
The rates proposed are 72 p with bonus, 80 p and 79 p. From all these the proposal with
72p seems to be a good rate for consideration as it is incentive based and will enhance
productivity.

b. Could the productivity increase as suggested by the 9.8 % offer plan really be
anticipated?
Yes, as per the analysis and calculation the productivity seems to increase and will also
take into account for the increment demand.

Conclusion-

Actual Projected cost with YTD information is less than Projected Weekly cost of 5612.
From the Firm's Perspective The new implementation is very much suitable while taking
employee’s concerns into consideration.