1. Prepare a list of questions that you will need to have answered in order to analyze this situation.
2. Prepare a list of observations regarding the information provided in the case.
3. What preliminary thoughts do you have on solutions/ partial solutions to the points you have raised?
An automobile manufacturer is conducting a product recall after it was discovered that a possible defect in the steering mechanism could cause loss of control in certain cars. The recall covers a span of three model years. The company sent out letters to car owners promising to repair the defect at no cost at any dealership. The company’s policy is to pay the dealer a fixed amount for each repair. The repair is somewhat complicated, and the company expected learning to be a factor. In order to set a reasonable rate for repairs, com-pany engineers conducted a number of repairs themselves. It was then decided that a rate of $ 88 per repair would be appropriate, based on a flat hourly rate of $ 22 per hour and a 90 percent learning rate.