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a. JP Carruthers Co
JP Carruthers is a medium-sized company with a turnover of £ 220 million and a workforce of
1100 in the last 10 years. The company's main revenue is in the car industry with a net profit of £
14,480,000 in the past year. The company has always received the trust of consumers. They are
negotiating the wages of their workers with Transport Workers' Union - which represents about
600 JP Carruthers Co-workers.
b. Characteristics of JP Carruthers Co
In order to proceed with the successful negotiation of wages, the two sides made their salary
Transport Workers' Union:
- A price of 72p a unit
- The average woman produces about 71 units a day. Therefore, we would like to receive £
5.68 more per woman per day with 8p more.
- do not agree with the price less than 80p per product

JP Carruthers Co

- Maintaining the price of 72p per standard unit with a daily average of 61 units/person and
an increase of 122p since 62 units

Both parties have made reasonable suggestions and desires to have an appropriate salary as
well as clear labor efficiency to bring the best benefits to both parties.


Transport Workers' Union wants to negotiate the salary of about 600 JP Carruthers Co
employees and wants to raise the wage for each unit is 80p. And Transport Workers' Union does
not accept if the salary is less than 80p / unit

Data collected by JP Carruthers Co and reviewed as follows:

- Each person made 71 units a day and was authenticated by the accountant. Average
weekly output for the year to date is 7100 units; so, the average daily output is 7100/5 = 1420
- The number of women directly employed on the line is 20, so the average daily output is
1420/20 = 71 units/ day/woman
- If you raise your salary to 80p a unit, your salary will increase to 11.1%: (80-72) / 72 x
100 = 11.1
- If JP Carruthers Co accepts an increase of 80p a unit, the salary fund would be about 2.9
million euros from the original 26 million euros: 26 000 000x11.1% = 2 886 000

JP Carruthers Co proposal after reference study:

- Maintaining the price of 72p per standard unit with a daily average of 61 units/person
and an increase of 122p since 62 units
- The cost of the weekly increase is £ 5612:
(71 x 0.72) + (10 x 0.50) = 56.12
56.12 x 20 x5 = £ 5612
- Amounts to be paid if JP Carruthers Co does not have to raise wages
71 x 5 x 20 x 0.72 = 5112
- The goal of the JP Carruthers Co is to increase wages by no more than 10% and the
average wage increase by around £ 500:
(5612 - 5112) / 5112 x 100 = 9.78%

Below is the performance report of Annie Smith - forewoman for the door Trim Line

Production performance report

Fiscal Week: 10 Cost Centre: 172 Foreperson: Smith
Employee Pay No. Av. Daily Output this Week Av. Daily Output Y-T-D
11 98 98
13 88 89
17 72 76
23 44 43
24 52 50
26 79 78
30 77 79
32 52 52
34 96 96
35 86 87
40 67 69
42 64 66
43 95 98
45 86 88
47 50 53
48 42 41
52 43 44
54 45 46
55 94 97
59 68 70
Avg: 71

3. Operations management & IT

According to the Smith statistic above, an average of 1420 and 1398, we get an average
of 71 units per person. But that is the average daily year to date to be 71 units and if the
average daily year to date is less than 71 units, that means that each average producer
can be less than 71 units. We try to apply the salary calculation of both JP Carruthers Co
and Transport Workers' Union:
JP Carruthers Co: If the payment method of the JP Carruthers Co is applied, they will pay
an average of £ 5612 per week. And because there is no technical improvement, the
increase in productivity is likely to come from people whose productivity is below
average and JP Carruthers Co will have to pay less. Those who have the capacity, as well
as techniques, are hardly able to increase productivity because they are not replacing
new machines. That's why they still produce an average of 71 units per person, so the
cost per unit is about 79p:
5612/ (71 x 5 x 20) = 79p
Not even if the product by the average amount of the week in the week it it is it is less
than 71p, which must be pay average for each unit will be less. This payment is a linear
function and it depends on the performance variable.
Transport Workers' Union: If paid by Transport Workers' Union, JP Carruthers Co must
pay workers £ 5680 per week and wages will increase by 11.1% if the average yield is
unchanged at 72 units. This method of payment is a linear function and if the
productivity increases, the wage fund increases but does not increase much if the
average output is 72 units per person.

4. Conclusion:
Ways to pay JP Carruthers Co 's salary are better than paying Transport Workers' Union
if the average output of each person is 72 units if more than one unit, then the pay is
the opposite.JP Carruthers Co is a medium-sized company and is gaining trust from
customers as well as a good management team, so I think it should be divided into two
phases depending on the time of development:
Stage 1: Apply according to the JP Carruthers Co wage calculation for the following
If they do not want to expand and develop, it will not necessarily increase productivity,
but it is very effective because it promotes the productivity of those who have not
reached the average level of output but also increases their wages. have an above
average yield.
Pay less than the Transport Workers' Union and do not exceed 10% of the proposed
Stage 2: Apply according to Transport Workers' Union 's salary calculation
When the company wants to expand production, increase sales, if each average
producer is 72 units, with this calculation, JP Carruthers Co will have to pay wages
cheaper than the old calculation, for example, the number of employees still
After boosting productivity at the first stage, it is time to keep the balance between
supply and demand.