Question

The division manager for Norton Pipe and Steel Company decided to implement a new incentive system for managers of Northern’s three plants. The plan called for a bonus to be paid next month to the manager whose plant has the greatest relative improvement over the monthly production volume. The following data reflected the historical production volumes at the three plants.

	Plant 1	Plant 2	Plant 3
Mean SD	700 200	2300 350	1200     30

At the close of the next month, the monthly output for the three plants was: Plant 1 = 810, Plant 2 = 2600, Plant 3 = 1320.

Suppose the division manager awarded the bonus to the manager of Plant 2 because her plant increased its production by 300 units over the mean. This was a bigger increase than that of any of the other managers. Do you agree with who received the bonus this month? Explain, using the appropriate statistical measures to support your position.

Answer 1