Question

It took a Wisconsin shipyard 125,000 labor-hours to produce the first of several tugboats that you expect to purchase for your shipping company, Great Lakes, Inc. Boats 2 and 3 have been produced by the company with a learning factor of 85%. At $40 per hour, what should you, as purchasing agent, expect to pay for the fourth unit?

Answer #1

A learning curve is

Y = cumulative average time per unit

a = time taken to produce initial quantity.

X = the cumulative units of production

b = the learning index or coefficient, which is calculated as: log learning curve percentage ÷ log 2

We need to find out the time taken for making 4 units and 3 units first

a= 125000

b= -0.234

>>>For X=3,

Y = 96663.75

Cummulative time for 3 units = 96663.75*3 = 289991.25 hrs

>>> For X= 4

Y = 90370.77

Cummulative time for 4 units = 90370.77*4 = 361483.08 hrs

Time taken to produce 4th unit = 361483.08-289991.25 = 71491.83 hrs

expected payment for 4th unit = 71491.83*40 = $2859673.2

Suad Alwan, the purchasing agent for Dubai Airlines, has
determined that the second plane took 20,000 hours to produce.
Using an 85% learning curve and a $30-per-hour labor charge, he
wants to determine the cost of the four additional planes.
Time required for the fourth unit = 17000 hours (round your
response to the nearest whole number).
Cost of the fourth unit = 510,000 dollars (round your response
to the nearest whole number).
Time required for the fifth unit =...

For the next two problems (5. and 6.) you may refer to
the below chart of learning curve coefficients and multipliers or
you can calculate the coefficients using the formulas discussed in
the lectures. You will arrive at the same answer regardless of
which path you choose.
70%
75%
80%
85%
Unit
Unit
Time
Total
Time
Unit
Time
Total
Time
Unit
Time
Total
Time
Unit
Time
Total
Time
5
.437
3.195
.513
3.459
.596
3.738
.686
4.031
10
.306
4.932...

PRODUCTION PLANNING AT VIKTOR LENAC SHIPYARD
Professor Giorgio Sinković and Professor David M. Currie prepared
this case solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective
handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect
confidentiality.
This publication may not be transmitted, photocopied, digitized, or
otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction...

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Analysis: This section should include the issue register as a
bare minimum, but may include also why-why diagrams, a Pareto
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analysis or simulation of this case study might be possible but
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