Manceville Air has just produced the first unit of a large industrial compressor
ID: 457617 • Letter: M
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. Your job as the production cost estimator is to prepare the estimate. Refer to Table below. In reviewing past production data, it appears that the company has experienced a 85% 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 the estimate.
Refer to Table
a)Total manufacturing time for the: First 8 units _______ hours (round your response to the nearest whole number)
b)Manufacturing time for the last 7 units(i.e., units 2 thru 8) = _____ hours (round your response to the nearest whole number)
Please Show Work
80% 80% 85% 85% 90% 90% Unit Number Unit Time Total Time Unit Time Total Time Unit Time Total Time 8 .512 5.346 .614 5.936 .729 6.574Explanation / Answer
The learning-curve coefficient technique can be used for determining the manufacturing time by using following formula:
TN = T1C
Where,
TN = number of labor-hours required to produce the Nth unit
T1 = number of labor-hours required to produce the first unit
C = learning-curve coefficient as per learning rate.
T1 =112 hrs
Total time for producing eight units, T8 = T1C
From table, Total time, C = 5.936 for 85% learning curve.
T8 = 112 x 5.936 = 664.832 hours
Manufacturing time for the last 7 units = T8 – 112 = 552.832
Total Manufacturing time for the first 8 units = 664.832 hours
Total Manufacturing time for the last 7 units = 552.832 hours
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