Honda Motor Company has discovered a problem in the exhaust system of one of its
ID: 436322 • Letter: H
Question
Honda Motor Company has discovered a problem in the exhaust system of one of its automobile lines and has voluntarily agreed to make the necessary modifications to conform with government safety requirements. Standard procedure is for the firm to pay a flat fee to dealers for each modification completed. Honda is trying to establish a fair amount of compensation to pay dealers and has decided to choose a number randomly selected mechanics and observe their performance and learning rate. Analysis demonstrated that the average learning rate was 90 percent, and Honda then decided to pay a $60 fee for each repair (3 hours x $20 per flat-rate hour). Southwest Honda Inc., has complained to Honda Motor Company about the fee. Six mechanics, working independently, have completed two modifications each. All took 9 hours on the average to do the first unit and 6.3 hours to do the second. Southwest refuses to do any more unless Honda allows at least 4.5 hours. The dealership expects to perform the modifications to approximately 300 vehicles. What is your opinion of HondaExplanation / Answer
Learning Rate = LR = 6.3/9.0 = 70%
Job 1 2 4 8 16 32 Time 9 hours 6.3 .7(6.3) = 4.41 .7(4.41) = 3.09 .7(3.09) = 2.16 .7(2.16) = 1.51
It appears that the mechanics have a good deal, as long as they are able to modify enough cars. Honda assumed a 90% learning rate, while the mechanics are experiencing a 70% learning rate. Examination of the above table indicates that the mechanics breakeven point is approximately 8 cars, and they have 300 to repair.
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