Subject category:
Case Method and Specialist Management Disciplines
Published by:
Darden Business Publishing
Length: 5 pages
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https://casecent.re/p/67133
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Abstract
Engine Services, Inc is a world-class jet-engine overhaul center. An about-to-be-published quarter report adds fuel to the perception that the overhaul facility is providing too much value relative to contractual guarantees. The root of the problem may be the ''two standard-deviation rule'' that is being used to provide a cushion above the guarantee. Lower targets increase the chances of costly rework but save on the costs of initial work.
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Abstract
Engine Services, Inc is a world-class jet-engine overhaul center. An about-to-be-published quarter report adds fuel to the perception that the overhaul facility is providing too much value relative to contractual guarantees. The root of the problem may be the ''two standard-deviation rule'' that is being used to provide a cushion above the guarantee. Lower targets increase the chances of costly rework but save on the costs of initial work.