Case Study 7-1 Cell Phone Company Uses Robotic Assembly Line

A small cell phone manufacturing company using a robotic assembly line employs 13 people
with the following annual salaries:

$ 120,000- President $ 100,000 Vice president

$ 75,000- Financial Manager $ 65,000 Sales manager
$ 40,000- Production Manager $ 30,000 Production supervisor
$ 30,000- Warehouse Supervisor $ 16,000 Six unskilled laborers

1. Calculate the mean, median and mode for the salaries rounded up to the nearest thousand.

Mean=
($ 16,000 + 16,000 + 16,000 + 16,000 + 16,000 + 16,000 + $ 30,000 +
$ 30,000 + $ 40,000 + $ 65,000 + $ 75,000 + $ 100,000 + $ 120,000)/13

= $ 43,000 (from 42769)

Median= $ 30,000

Mode= $ 16,000

The mean, median and mode are used to describe the central tendency through the
"middle" value of the entire set. The mean is the highest among all the tendencies and
mode is the lowest.

2. The statistic most often used to describe company salaries is the median or the mean. For
this company, does the mean give an accurate description of the salaries? Why or why
not?
No, it doesn’t give an accurate description of the salaries. There are wide
differences between the salaries (wide range). To explain that, the difference between the
highest and lowest salaries is big that it doesn’t describe either the high salaries or the
low salaries since the mean is only the average.
3. Which statistic would this company's labor union representative be most likely to cite
during contract negotiations and why? Which statistic would the company president most
likely report at the annual shareholders' meeting and why?

This labor union’s representative will likely cite the mode of the salaries. This is
because the labor union is a group of the workers with different occupations. Their
purpose is to represent the collective interests of workers in negotiations with employers
over wages, hours, benefits and working conditions. Thus, given the $ 16,000 mode of
the salaries and knowing the highest salary is $ 120,000, the labor union representative
will aim to address this inequality regarding the salaries.

The company president will likely report the mean of the salaries. If we were part
of the shareholders, we would care about where our money is being spent on or how
much our money is increasing, therefore, our focus is only on the profit the company
earns. We will not care about which of the workers receive the lowest salary unless they
cause problems. This is where the reason (why the mean is what we should report)
changes. If the workers cause some kind of commotion, our attention would divert to the
problems or challenges that the company faces. Given the mean, we would the meeting
would focus on how the mean or average implies that there is a huge gap between the
(highest and lowest) salaries. Thus, as stockholders, we would want to address this
problem in order avoid the possible unnecessary costs in the future. We would tell them
about how much money the company is only able to give. We would also look for other
ways to address other problems like this.

4. Name another situation in which it would be beneficial to report the highest average
salary, and name another situation where it would be beneficial to use the lowest average
salary.
To answer this, first we should know the meaning of average salary. Average
salary is the amount of money earned by workers in a particular industry, economy, area,
etc. during a particular period of time. Another situation in which it would be beneficial
to report the highest average salary is when the company wants to hire more workers. By
showing their highest average salary, it will be easier to lure workers or employees into
working for their company. Moreover, it would be beneficial to use the lowest average
salary when the company decides to decrease tax incentives (there is no need for
encouraging people to do something so incentives are decreased), therefore increasing the
 tax of the employees and employers. It will be better to report the lowest average salary
so the workers will understand that the decrease in their salaries is just and rightful.

Insights/conclusion

To analyze the whole situation, knowing that the company will be using the
robotic assembly line, the company would need less manufacturing workers, thus giving
much less importance to the remaining manufacturing workers. This is reflected in the
workers’ low salaries since they have the robots to manufacture their products instead of
the laborers themselves.