Learning rate; total cost of building
Company X collected the following cost data on the first 6 units of a new machine.
Unit number Cost, $ millions
1 300
2 244
3 211
4 194
5 179
6 169
Using Excel:
(a) Estimate the learning rate.
(b) Company X is bidding on a contract for 24 new machines. Explain how the estimated learning curve is helpful to Lockheed.
(c) Estimate the total cost of building 24 additional machines.
(d) Estimate the cost of building the 30th machine.
I have started this problem, but I am a little lost. Please help. Thanks!!
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Solution Preview
See the attached file. Thanks
Company X collected the following cost data on the first 6 units of a new machine.
Unit number Cost, $ millions
x Yx Ln(x) Ln(Yx)
1 300 0.000 5.704
2 244 0.693 5.497
3 211 1.099 5.352
4 194 1.386 5.268
5 179 1.609 5.187
6 169 1.792 5.130
Using Excel:
(a) Estimate the learning rate.
The normal form of learning equation is Yx = Kx^n
Where:
x= unit number
Yx=Cost of producing the xth unit
K=Cost to procude the first unit
n=log b/log 2 where b is learning ...
Solution Summary
This post shows how to calculate learning rate, total cost of building in different number of machines