1. At Cedar Trucking Company, the average driver travels 1,800 miles per week and it charges customers $2.10 per mile. Cedar provides each driver a $100,000 big rig and pays the driver $0.57 per mile. It estimates that the direct cost (gas, maintenance, and related expenses), other than the driver, for operating a truck is $0.85 per mile. Jacky, the operations manager has been working on several ways to improve productivity, as measured by miles per driver, by 5%. She has now focused on an incentive system that would share 25% of the extra profits that the company generates when the average mileage travelled in the company goes over the productivity improvement goal (there will not be any bonus paid if the company does not meet this goal) combined with some technology that would make these additional miles "fast" miles (covers maximum distance in an hour). In presenting this to drivers, she estimates that each driver should average 100 additional miles and that it would take the drivers 2 hours on average to drive the extra distance, so she tells them that they would make (on average) per hour for the additional miles. If the drivers can reach her estimate of extra mileage, would the incentive system pay out to the drivers?

 l

Answer rating: 100% (QA)

To determine if the incentive system at Cedar Trucking Company would pay out to the drivers based on ... View the full answer