Management is considering adopting a bonus system to increase production. One su

Question

Management is considering adopting a bonus system to increase production. One suggestion is to pay a bonus on the highest 7 percent of production based on past experience. Past records indicate that, on the average, 4,152 units of a small assembly are produced during a week. The distribution of the weekly production is approximately normally distributed with a standard deviation of 57 units. If the bonus is paid on the upper 7 percent of production, the bonus will be paid on how many units or more?

Explanation / Answer

MEAN = 4152

STANDARD DEV = 57

X = MEAN + Z*standard deviation

upper 7% means = 93%

the z score for 93% = 1.48

hence the x = 4152 + 1.48*57 = 4236.36

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