The existing incentive system of a certain factory is, Normal working week: 5 days of 9 hours each plus 3 late shifts of 3 hours each Rate of payment: Day work – Rs.10 per hour, late shift – Rs.15 per hour
Additional hours payable: Rs.25 per day shift, Rs.15 per late shift Average output per operative for 54 hours week, i.e. including 3 late shifts: 120 articles In order to increase output and eliminate overtime it was decided to switch on to a system of payment by results. The following information is obtained.
Time rate [as usual] Rs.10 per hour
Basic time allowed for 15 articles: 5 hours
Piecework rate: Add 20% to price
Premium bonus: Add 50% to time
You are required to work out,
[I] Hours worked
[II] Weekly earnings
[III] Number of articles produced and
[IV] Labor cost per article for an operative under the following systems Existing time rate Straight piece rate Rowan plan Halsey plan
Assume that 135 articles are produced in a 45 hours week under straight piece rate, Rowan plan and Halsey plan. The additional bonus under the existing system will be discontinued in the proposed incentive scheme.