Manceville Air has just produced the first unit of a large industrial compressor

Question

Manceville Air has just produced the first unit of a large industrial compressor that incorporated new technology in the control circuits and a new internal venting system. The first unit took 112 hours of labor to manufacture. The company knows from past experience that this labor content will decrease significantly as more units are produced. In reviewing past pro- duction data, it appears that the company has experienced a 90% learning curve when producing similar designs. The company is interested in estimating the total time to complete the next 7 units. Your job as the production cost estimator is to prepare

Explanation / Answer

We have to find out total time to complete next 7 units , which will be = Total time to complete first 8 units – time to complete first unit

Given are following data :

Time to complete first unit = 112 hours

Learning rate = 90 %

We will use Standard Learning curve table ( with time for first unit = 112 hours and Learning rate = 90%) to calculate total time required to complete first 8 units .

Accordingly , total time required to complete first 8 units = 736.26 hours

Therefore , Total time required to complete next 7 units

= Time to complete first 8 units – Time to complete first unit

= 736.26 hours – 112 hours

= 624.26 hours

TIME REQUIRED TO COMPLETE NEXT 7 UNITS = 624.26 HOURS

TIME REQUIRED TO COMPLETE NEXT 7 UNITS = 624.26 HOURS

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