Calculating Bids and Learning Curve
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Lambda Computer Products competed for and won a contract to produce two prototype units of a new type of computer that is based on optics using lasers rather than on electronic binary bits. The first unit produced by Lambda took 5,000 hours to produce and required $250,000 worth of materials, equipment usage and supplies. The second unit took 3,500 hours and used $200,000 worth of materials, equipment usage and supplies. Labor is $30.00 per hour.
You were asked by your customer to present a bid for 10 additional units as soon as the second unit was completed. Production would start immediately. What would your bid be?
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Solution Summary
Solution calculates the bid amount by using the given information.
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Please refer attached file for proper formatting.
Please refer A47 cell in attached file. "Total labor cost" should be read as "Total material and other costs"
Learning rate of labor=3500/5000=70.00%
Learning rate for materials, equipment usage and supplies=200000/250000=80.00%
First we, calculate time needed to manufacture ten units (number 3 to 12)
Slope of learning curve=ln(learning rate)/ln(2)=c=-0.514573173
Unit # ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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