Modifications to conform to government safety requirements

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Reference no: EM131692287

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 to 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 of randomly selected mechanics and observe their performance and learning rate. Based on the results of this test, Honda decided to pay a $60 fee for each repair (3 hours × $20 per flat-rate hour).

Southwest Honda, Inc., is considering whether to participate in the program. If they can average three hours or less on each repair (what Honda is willing to pay them for), it will make sense for them to agree. They performed their own test repairs to help in their decision process. Six mechanics, working independently, have completed two modifications each. On average, the mechanics took 9 hours to do the first unit and 6.3 hours to do the second. The dealership expects to perform 300 such modifications, which works out to 50 modifications per mechanic, including the first two units already built. Use Exhibit 6.5.

On average, how many hours will it take Southwest Honda to perform each modification using all six mechanics as planned?

Reference no: EM131692287

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