Lazer Technologies Inc. (LTI) has produced a total of 20high-power laser systems that could be used to destroy anyapproaching enemy missiles or aircraft. The 20 units have beenproduced, funded in part as private research within the researchand development arm of LTI, but the bulk of the funding came from acontract with the U.S. Department of Defense (DoD).
Testing of the laser units has shown that they are effectivedefense weapons, and through redesign to add portability and easierfield maintenance, the units could be truck-mounted.
DoD has asked LTI to submit a bid for 100 units.
The 20 units that LTI has built so far cost the followingamounts and are listed in the order in which they were produced:Use Exhibit 6.4 and Exhibit 6.5
UNIT
NUMBER | COST
($ MILLIONS) | UNIT
NUMBER | COST
($ MILLIONS) |
| 1 | | $ | 13.0 | | 11 | $ | 3.7 | |
| 2 | | | 8.8 | | 12 | | 3.6 | |
| 3 | | | 7.4 | | 13 | | 3.4 | |
| 4 | | | 6.2 | | 14 | | 3.4 | |
| 5 | | | 5.7 | | 15 | | 3.2 | |
| 6 | | | 5.2 | | 16 | | 3.2 | |
| 7 | | | 4.8 | | 17 | | 3.0 | |
| 8 | | | 4.5 | | 18 | | 2.9 | |
| 9 | | | 4.2 | | 19 | | 2.8 | |
| 10 | | | 4.0 | | 20 | | 2.8 | |
|
a. Based on past experience, what is thelearning rate? (Do not round intermediate calculations.Round your answer to the nearest whole percent.)
b. What bid should LTI submit for the totalorder of 100 units, assuming that learning continues?
c. What is the cost expected to be for the lastunit under the learning rate you estimated?
