a. Learning rate = time taken for 2nd unit/time taken for 1st unit = 20/25 = 80%.
Hours required by 3rd unit will be computed using the formula: Tn = T1*c where Tn is the time requirement for 3rd unit. T1 = 25. C = 0.702 (from learning curve coefficient table) for 80% and n = 3.
Thus T3 = 25*0.702 = 17.55 hours.
Hours required for 20th unit: T20 = T1*C (for n=20, 80%) = 25*0.381 = 9.53
Productivity for 1st unit = 1/25 = 0.04. Productivity for 20th unit = 1/9.53 = 0.1050
% change in productivity = (0.1050-0.04)/0.04 = 162.47%
b. Total no. of hours required for 20th unit = no. of hours for 1st unit*learning curve coefficient for total time (80%,20) = 25*10.485 = 262.13
Average time to assemble all units = 262.13 hours/20 units = 13.11 hours per unit.
The project should be accepted as average time of 13.11 hours is less than customer estimated time of 15 hours. This will lead to higher profitability.
c. For 20 more units the first unit will be = 20+1 = 21st unit. The first unit will take = 25 hours*C for 21,80% = 25*0.355 = 8.88 hours.
Time taken for 20th unit (20+20=40) = 25 hours*C for 40,80% = 25*0.305 = 7.63 hours
Labor hours required for 2nd order = time to produce 40 units – time to produce the 1st lot of 20 units = 25*total time coefficient for 40,80% – 262.13 (as computed earlier) = (25*17.193)-262.13 = 167.70
Labor time per unit = 167.7/20 = 8.39 hours per unit
d. Total labor hours = 503. Let the C coeffieicent be x. Thus 25*x = 503
or x = 503/25 = 20.12. From the coefficient table (in the 80% column) we can see that C coefficient (total time) pertains to N = 50.
Thus 50 units can be produced in the 1st month.
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