I have posted this question once and didn\'t get any response.... CAN SOMEONE PL
ID: 370234 • Letter: I
Question
I have posted this question once and didn't get any response.... CAN SOMEONE PLEASE HELP....
******HELP***** I HAVE NO IDEA EVEN WHERE TO BEGIN......
You have just completing 20 units of a special subassembly for an electronics manufacturer at a price of $350 per unit. The customer was very pleased with your products and is suggesting a long term contract. If approved, the customer would expect 40 units delivered once every 6 months for the next two years (160 units in total). The first order would be delivered in 6 months (actual production for the forty units would have to begin at least 3 weeks before the order is due. The total cost of the first unit was $564.44 and the cost of the twentieth unit was $279.62. Experience shows that waiting more than a few weeks to repeat to do a repeat order is essentially like starting over with Y1 = $564.44. However, learning effects continue as long as a product is being produced.
A: What is the average cost of the 40 units if they were produced “just in time,” before being shipped out?
B: What would be the average cost of the first 40 unit order if it was produced immediately following the completion of the current order (ignoring inventory holding costs—which would be substantial!)?
C: What would be the average cost of production if the all 160 units were produced immediately after completion of the current order. (again, ignoring inventory holding costs—which would be even more substantial)?
D. Too bad we don’t have more time . . . aren’t you disappointed we can’t look at the effect of holding costs on the tradeoffs described in the last three questions?
ANSWER D CAN BE IGNORED THAT IS JUST MY TEACHERS SENSE OF HUMOR I BELIEVE....
***** CAN SOMEONE PLEASE HELP ME WITH THE FOLLOWING, AS THIS IS ONE OF MY SAMPLE PROBLEMS I USE TO STUDY THE MATERIAL, I WOULD LOVE AS MUCH DETAILS AS POSSIBLE IN EXPLAINING THIS PROBLEM!! THANK YOU SO MUCH IN ADVANCE FOR ALL YOUR HELP!!!M
Explanation / Answer
Given that the Cost of first unit is $564.44 and the cost of twentieth unit is $279.62
There is a formula that can be used to answer the questions
Y = aXb
Where:
Each time the number of attempts of the process is doubled, the overall cost will decrease by a constant amount as per learning curve methodology.
To begin with it is mentioned that average cost of 20 units is $350, therefore Y=350 when X=20 and a=564.44
In other words 350 = 564.44* (20)b
Value of b coefficient of learning is .85 from the solution of the above equation.
Answer A, B, and C
Average cost for 40 units = 546.44*(40).85 = $302.33 and Average for 160 units = 546.44(160).85
For 160 units, comulative cost is $35532.19 approx. and therefore average cost = $222.08
Parameter Value Find learning coefficient given 2 times Unit number of base unit 1 Cost for base unit,Y1 564.44 Unit number of last unit,N 20 Cost for last unit, twentieth 279.62