Question

You are the manager of a logistic company. The profit of your company depends on the number of parcels delivered in an hour. You cannot directly monitor the drivers who help transport parcels, however. You are now considering two possible payment schemes to the drivers.

Scheme A: a fixed hourly wage.

Scheme B: a fixed payment on parcels transported in an hour.

1. Which scheme would you suggest to your CEO? Briefly explain your answer.   
2. Suggest a possible scheme that is better than Schemes A & B? Briefly explain your suggestion.

Answer 1

a) I suggest scheme B(fixed payment on parcel transported in an hour) because if there is fixed payment on each parcel then the drivers will also motivate to give the parcel to its owner on time as they will get there pay on each delivery and they will definetley try to make more and more parcel deliver on time so that they get there pay more.

In scheme A they will get according to an hour but in scheme B as they can give as many as parcel which they can deliver in an hour and this will also increase the capacity to give more parcel in less time.

B) a better scheme would be a scheme which pays the workers according to a single day they work. As this will improves the efficiency to work for the workers and that will also helps the person who need a day job, he can also work for a day to earn.

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