Exam 21: Learning Curves

A contractor builds large ships for the Department of Defense. A recent contract called for 12 amphibious landing platforms. It was originally estimated that the first of these would cost $1 billion and that 80 percent learning would be appropriate. In fact, the first ship cost $1.6 billion and the second $1.12 billion. What is the revised learning curve? What will be the total cost of the 12 ships? Is it higher or lower than the original estimate? If the defense department cuts the contract from 12 ships to 9, what happens to the average cost per ship?

The learning curve rate is:

In the Learning-Curve Coefficients table for 80 percent learning, the seventh unit has a unit time value of 0.534. Verify that table entry by use of the formula approach. Use five decimals in your work.

A company negotiates a price for two aircraft that includes a reduction in labor on the second aircraft consistent with a 70% learning curve. Suppose the first aircraft took 100 hours. If the improvement rate changes to 40%, how will the total time to complete both aircraft change?

The learning rate for a product is 85 percent. The first unit took 10 hours to complete. The manufacturer wants to determine how many hours the fourth unit will take by using the formula approach. What is the coefficient b for that calculation?

Using the doubling approach, determine how long it will take to make the 32nd unit of a product if it took 1 hour to complete the first product with a 50% learning curve.

In the formula approach to learning curve calculations, you have used the formula T_N = T₁ (N^b). Your manager shows you a problem for which b is specified as −.18443. What learning curve does that value represent?

A firm that successfully pursues a steeper-than-industry-average learning curve and manages costs down may still fail if, by underestimating a strong competitor, it fails to gain the added volume necessary for the learning curve to exist.

The fact that human activities typically improve when they are done on a repetitive basis is described by a:

You are a cost accountant for a firm that specializes in "small" (under 10 billion dollars) defense contracts for specialty electronics products, such as fully portable, miniaturized CD-ROM imaging stations and global positioning transmitters/transponders. Your company is well respected in this field. One project up for competitive bids is a Field Service, Hands-Free, Individual Multi-Protocol Secure Communicator (a battlefield version of a cellular telephone, but built into each soldier's helmet, and containing necessary encryption technology). The Department of Defense wants 8 of these experimental devices to test their practicality. You have reviewed the contract specifications, and estimated that the first FSHFIMPSC should require 2350 hours, and that the product is subject to a 75% learning curve. All costs of the project (machine purchase, machine time, direct and indirect labor, and materials) have been bundled (allocated) into an hourly labor rate of $172 per hour. Determine the total project cost using the provided data.

The first unit of a product took 900 hours to build and the learning curve is 90%. How long will it take to make the first 3 units?

A small manufacturer that offers "hand crafted" furniture has developed a new style of desk that they believe will be very successful in the marketplace. It is expected that the first desk will take about 60 hours of craftsmen's time to complete. They expect a 90% learning curve for this desk. How long will it take to make the 20th desk? The firm is considering accepting an order for 25 desks. How many hours of labor will this require for all 25?

Learning curves have a variety of purposes. Which three broad categories does the text place them into?

The first unit of a product took 50 hours to build, and the learning curve is 80%. How long will it take to make the third unit? (Use at least three decimals in the exponent if you use the formula approach.)

Which of the following statements comparing learning curve rates (L) to improvement rates is TRUE?

The first unit took 10 hours and the third unit took 5.68 hours. What is the improvement rate?

A small manufacturer builds wooden pleasure boats in a craftsman manner by traditional labor-intensive methods. The first boat is estimated to take 1,000 hours of skilled labor, which costs $40 per hour. They currently have five workers that can work 2,000 hours a year. They assume that there is an 80% learning curve. How many boats can they build in their first year?

If the learning curve for a process is 80 percent, that same process has a 20 percent ________.

The fundamental premise underlying learning curve analysis is that:

The ________ is the simplest approach to learning curve problems.