What does the reward encourage?
Can rewarding output increase defects and reduce business value?
Entering midway? Revisit Order before demand is known for the preceding worked example, or start here and use the explanation below.
Start with a concrete question
Two authored production plans produce 40 units with 2 defects or 60 with 15. Good units earn 8 credits, all units cost 2, and defects incur a repair cost. A bonus pays per produced or accepted unit.
Try the initial inputs, then write a prediction before changing one setting. All calculations run locally on your CPU.
What do you expect?
Predict whether paying only for accepted units necessarily makes the careful plan preferable.
Change one thing. Inspect what happens.
- Compare worker bonus with business net under output rewards.
- Switch to accepted-unit rewards and check both outcomes; do not assume the repair solved everything.
- Change defect cost and propose an incentive rule with a quality constraint.
Your settingsMechanism
Calculation belowEvidence
Compare outcomes
Compare the current results
Every bar starts at zero and uses the same numeric scale in this chart. The upper bound automatically adjusts to the largest current value (at least 1), so compare the numbers when changing inputs. Units and quantities come from each label; different kinds of quantity are not interchangeable. Displayed values are rounded to at most six significant digits.Follow the calculation
- Careful: good 38, defects 2, bonus 160; business net 8 × good − 2 × all − 3 × defects − bonus = 58.
- Rushed: good 45, defects 15, bonus 240; business net 8 × good − 2 × all − 3 × defects − bonus = -45.
A metric creates incentives. Paying for accepted units reduces rewards for defects here but does not necessarily make the careful plan preferable to the worker or business.
Captures keep your inputs, prediction and observation. Results are recalculated from those inputs. Resetting inputs keeps your captures and challenge history.
Explain the mechanism
What does the reward encourage?
Two authored production plans produce 40 units with 2 defects or 60 with 15. Good units earn 8 credits, all units cost 2, and defects incur a repair cost. A bonus pays per produced or accepted unit.
Predict before changing inputs
Predict whether paying only for accepted units necessarily makes the careful plan preferable.
Understand the mechanism
A reward metric can differ from the organization’s objective. Produced units include defective units that do not earn sales revenue here.
With bonus 4 on all units and repair cost 3, careful net is 304−80−6−160=58. Rushed net is 360−120−45−240=−45, despite its higher worker bonus.
Paying accepted units reduces incentives for defects but the rushed plan still has more accepted units. A quality threshold or different task design may be necessary.
Calculate it yourself
Business net = 8 × accepted − 2 × produced − repair cost × defects − worker bonus.
Guided investigation
Compare worker bonus with business net under output rewards.
Switch to accepted-unit rewards and check both outcomes; do not assume the repair solved everything.
Change defect cost and propose an incentive rule with a quality constraint.
Assumptions and limitations
Two fixed authored plans; actual worker behavior and quality responses are not predicted.
Fairness, safety and longer-term customer effects cannot be represented by this one-period profit calculation.
Further investigations
High school: Design a classroom teamwork reward and identify a possible unintended behavior.
College: Model a third plan and compare constrained and unconstrained objectives.
Working professionals: Write an incentive review with quality floors, monitoring and stakeholder impacts.
Try a fresh case
A new plan produces 20 items with 3 defects, earns 8 per accepted item, costs 2 per produced item and 4 per defect, with no bonus. What is net?
This is a public practice check. Retries support learning; matching a number does not certify independent proficiency.
Take the investigation further
Choose any extension. These are project prompts for you to carry out; they are not automatically assessed.
School investigation
Design a classroom teamwork reward and identify a possible unintended behavior.
College investigation
Model a third plan and compare constrained and unconstrained objectives.
Workplace investigation
Write an incentive review with quality floors, monitoring and stakeholder impacts.
Keep the evidence, choose your next step
Completion records your own decision that you have worked through this investigation. Practice checks and independent project evidence are separate.