Jack Simpson, contract negotiator for Nebula Airframe Company, is currently invo

Question

Jack Simpson, contract negotiator for Nebula Airframe Company, is currently involved in bidding on a follow-up government contract In gathering cost data from the first three units, which Nebula produced under a research and development contract, he found that the first unit took 2,500 labor hours, the second took 2,125 labor hours, and the third took 2,000 hours. Use Exhibit 6 5 In a contract for three more units, how many labor hours should Simpson plan for? (Round your answer to the nearest whole number.) Prey 2 of 3Next > oe@ Type here to search

Explanation / Answer

Time taken by first unit = 2500

Time taken by second unit = 2125

Cummulative time taken by 1st and 2nd unit together = 2500+2125 = 4625

Cummulative improvement factor = 4625/2500 = 1.85

Now check for this 1.85 against unit 2 in the exhibit given. It is for 85% learning rate.

Cummulative time taken by 1st, 2nd and 3rd unit = 2500+2125+2000 = 6625

Cummulative improvement factor for third unit = 6625/2500 = 2.65

The value closest to 2.65 is 2.623 in the table for 85% learning rate.

Therefore, we can assume that learning rate is around 85%.

>>A contract for three more units would make it 6 units in total.

Cummulative improvement factor against unit 6 for 85% learning rate is 4.688

Total labor hours required = 4.688*2500 = 11720 hours

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