fabrication company has undertaken a job of design and installing unication towe
ID: 425993 • Letter: F
Question
fabrication company has undertaken a job of design and installing unication towers. The work includes foundation work, steel fabricating and comm erecting, setting up of communication hardware and lightening projection and other supplementary installations. This project opens up new with guaranteed future businesses and thus, the company has decided to spend a sum of Rs. 4 Million on research and development. It is also estimated that the first tower takes 4 months to complete. However, it is expected that the workforce is capable of achieving a flat 90% learning effect. If the company decided to assemble only this particular model of the towers and the company has limited resources to release for one tower at a given instance and one tower is erected at a given time. Answer part a) and b) of the question. opportunities for the company What is the expected time duration that the company should agree with the elient to manufacture 6 towers? a. i. ii. If one tower requires Rs. 2.4 Million worth of direct resources and a monthly overhead of Rs 400,000, determine the total profit or loss resulted in the project of building 8 towers if a tower is billed at Rs. 4.5 Million. ii. Just after the delivery of the above order, a second order for 8 towers has been received from a different customer, which is to be delivered in two years after acceptance of the order. Determine whether this timeline is feasible. Assume that the learning effect continues. 70%)Explanation / Answer
1. The learning is defined by the equation Yx = A * xb
Where x is the unit no. of the lot, and A is the cost / time associated with unit 1
learning exponent b = logp/log2 where p is the fraction defined as learning curve =0.9
b = log (0.9) / log 2 = -0.1053 / 0.6931 = -0.1519
Time for tower 2 = time for tower 1 x (2)b = 4months x (2)-0.1519 = 3.6
Time for tower 3 = 4 x ( 3)-0.1519 = 4x0.8463 =3.3852
Time for tower 4 = 4x (4)-0.1519 = 3.2404
Time for tower 5 = 4x (5)-0.1519 = 3.1324
Time for tower6 = 4 x(6)-0.1519 = 3.0469
(i) The expected time for producing 6 towers = sum of times form tower 1 to 6
= 20.4049
(ii) Variable Cost for tower 1 = 2.4M
Variable Cost for tower 2 = 2.4 x (2)-0.1519 = 2.16M
V.C. for tower 3 = 2.4 x 0.8463= 2.031M
VC for tower 4 = 1.944
VC for tower 5 = 1.8794
VC for tower 6= 1.8281
VC for tower 7 = 1.7858
VC for tower 8 = 1.7499
Total variable cost = 15.778M
Fixed cost = 400000x8 = 3.2M
R&D cost = 4M
Total cost = 15.778+3.2+4 = 22.97M
Bill for all towers = 8x4.5 = 36M
Total profit = 36-22.97 =13.03M
(iii) As in part (i), the timke for producing 6 towers was 20.404 months.
Time for producing 7th tower = 4 x(7)-0.1519 = 2.976
Time for producing 8th tower = 4x (8)-0.1519 =2.916
Total time = 20.404+2.976+2.916 = 26.29 months. which is higher than 24 months hence the commitment can't be honoured.
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