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Craig Phillips is a buyer at Socon, a manufacturer of large industrial pumps. He has a...

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Accounting

Craig Phillips is a buyer at Socon, a manufacturer of largeindustrial pumps. He has a requirement for a customized subassemblythat his preferred supplier, Oriel, is building for the first time.He is preparing for negotiation with Oriel, where a key issue willbe the price of a subassembly. Given the unique nature of thissubassembly, Craig expects to incorporate into the contract pricereduction targets based on learning curve estimates.

While Craig does not have specific data for Oriel, he hasaccumulated data for a subassembly that was similar in design andmanufacturing complexity.

Units

Total

Labour Hours

Average Labour

(per unit)

Learning

Rate

1

6

**********

2

10.8

4

19.2

8

35.2

16

64

32

115.2

64

211.2

128

384

Overall average improvement rate:

Applicable learning curve:

Assignment:

  1. Given the above data, calculate the average labour per unitgiven the cumulative total hours provided.
  2. Calculate the appropriate learning rate and the overall averageimprovement rate for this data set.
  3. Are gains from learning realized early in production or at alater point?
  4. A learning curve applies to improvements in the direct labourportion of a process. How does the learning curve differ from theexperience curve

Answer & Explanation Solved by verified expert
4.1 Ratings (746 Votes)
Answer The average labor per unit is calculated by findingTotal Labor Hours Number of units For exampleFor 2 units we have1082 54 labor per unitThe calculations for the rest of the data is tabulatedbelowThe    See Answer
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