It is estimated that a particular manufacturing job is subject to an 80 percent learning curve. The first unit required fifty labor hours to complete. What is the cumulative average time per unit after completing four units?
a. 40.0 hours.
b. 30.0 hours.
c. 32.0 hours.
d. 50.0 hours.
Explanation
Rule: The basic premise of the learning curve is that operating efficiency and/or production increases in repetitive tasks as experience is gained. The rate of improvement, measured by the learning curve, has a regular pattern that can be stated as follows:
As cumulative quantities double, average cost per unit decreases by a specified percent of the previous cost.
Choice “c” is correct. 32.0 hours cumulative average time per unit after completing four units.
Cumulative # of Units……Average Time per Unit
1……………………………………50 Hrs
2…………………………………….40 Hrs (50 x 0.8)
4…………………………………….32 Hrs (40 x 0.8)
Choices “d”, “a”, and “b” are incorrect, based on the above calculation.
I AM LOST WITH THE “COMPLETING FOUR UNITSâ€. PLEASE HELP ME OUT WITH THE CUMULATIVE # OF UNITS COLUMN. WHY WAS ROW# 3 SKIPPED? WHAT AM I MISSING HERE?
Thanks for your help guys!