Operations and Supply Chain Management
Operations and Supply Chain Management
14th Edition
ISBN: 9780078024023
Author: F. Robert Jacobs
Publisher: MCG
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Chapter 6, Problem 8OQ

a)

Summary Introduction

To determine: The time and parts costs for the dozen units.

Introduction: It is the rate to measure the performance of the person in the new skills and in gaining experiences.

a)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The first unit produced by Company L took 5,000 hours for production and required $250,000 worth of material. The second unit took 3,500 hours and $200,000. It is given that labor is $30 per hour.

Estimate the learning rate for labor:

Estimate the learning rate for Unit 1 to Unit 2:

It is calculated by dividing the time taken to complete the second unit and first unit.

Learning percentage=Time taken to complete second unitTime taken to complete first unit=3,5005,000=70%

Hence, the learning percentage is 70%.

Estimate the learning rate for material:

Estimate the learning rate for Unit 1 to Unit 2:

It is calculated by dividing the time taken to complete the second unit and first unit.

Learning percentage=Time taken to complete second unitTime taken to complete first unit=200,000250,000=80%

Hence, the learning percentage is 80%.

Determine the labor cost for 10 more units:

It is computed by subtracting the cumulative value for 2 units from cumulative value for 12 units and multiplying it with the time to produce first unit and labor cost per hour.

Labor cost for10 more units}=(Cumulative value for 12 unitsCumulative value for 2 units)×(Time to producefirst unit)×(Labor costper hour)=(5.5011.700)×5,000×30=3.801×5,000×30=$570,150

The cumulative values can be determined using the table of cumulative values. For example, 5.501 is the cumulative value for 12 units and 70% learning rate.

Hence, the labor cost for 10 more units is $570,150.

Determine the material cost for 10 more units:

It is computed by subtracting the cumulative value for 2 units from cumulative value for 12 units and multiplying it with the time to produce first unit and labor cost per hour.

Material cost for10 more units}=(Cumulative value for 12 unitsCumulative value for 2 units)×(Cost to producefirst unit)=(7.2271.800)×250,000=5.427×250,000=$1,356,750

The cumulative values can be determined using the table of cumulative values. For example, 5.427 is the cumulative value for 12 units and 80% learning rate.

Hence, the material cost for 10 more units is $1,356,750.

Compute the total cost:

It is computed by adding labor cost and material cost.

Total cost=Labor costMaterial cost=$570,150+$1,356,750=$1,926,900

Hence, the total cost is $1,926,900.

b)

Summary Introduction

To determine: The way the reassignment of personnel and equipment to another project would affect the subsequent bid.

Introduction: It is the rate to measure the performance of the person in the new skills and in gaining experiences.

b)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The first unit produced by Company L took 5,000 hours for production and required $250,000 worth of material. The second unit took 3,500 hours and $200,000. It is given that labor is $30 per hour.

Determine the labor cost for 10 more units:

Labor cost for10 more units}=(Cumulative valuefor 10 units)×(Time to producefirst unit)×(Labor costper hour)=(4.931)×5,000×30=$739,650

The cumulative values can be determined using the table of cumulative values. For example, 4.931 is the cumulative value for 10 units and 70% learning rate.

Hence, the labor cost for 10 more units is $739,650.

Determine the material cost for 10 more units:

Material cost for10 more units}=(Cumulative valuefor 10 units)×(Cost to producefirst unit)=6.315×$250,000=$1,578,750

The cumulative values can be determined using the table of cumulative values. For example, 6.315 is the cumulative value for 10 units and 80% learning rate.

Hence, the material cost for 10 more units is $1,578,750.

Compute the total cost:

It is computed by adding labor cost and material cost.

Total cost=Labor costMaterial cost=$739,650+$1,578,750=$2,318,400

Hence, the total cost is $2,318,400.

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