Learning Curve exercise

A manufacture has just produced the first unit. The first unit took 15,000 hours of labor to manufacture. The manufacture pays $50per hour for its labor. The manufacture knows from experience that this labor content will decrease significantly as more units are produced. In reviewing past production data, it appears that the manufacture has experienced an 85% learning curve when producing similar designs. The manufacture is interested in estimating the total time and cost to complete the next 20units. So, your job as the production cost estimator is to prepare the estimate.

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1) How many units can be produced within available time 150,000hoursand available budgetof$11,000,000?What is the total time and the total cost needed to produce these units?

2) Estimate the time and the labor cost it will take to complete the 5thunit.

3) What would be the new learning rate, to finish all the 20 units within the available hours 150,000?


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