Incentives in production: a case study

The motivation, rationale, and experiences of implementing an incentive scheme in a large petrochemical plant in the People´s Republic of China for the purpose of conserving the consumption of cooling water is described. Experimental implementation in a section of a plant is described in detail. A few incentive-induced features uncovered after analyzing the experimental data are reported. A mathematical model with several variations is presented. A better predictive property of the incentive scheme in comparison to a more conventional method is proved analytically. The effectiveness of the scheme is shown by the amount of water conserved, and by the management´s decision for plantwide adoption of the scheme. Practical issues encountered in experimental implementation, extensions of the scheme to more general situations, and theoretical problem inspired by the experiment are discussed