Reference no: EM132490921

Chris is a buyer at Excon, a manufacturer of large industrial pumps. He has a requirement for a customized sub - assembly that his preferred supplier, Conpump, is building for the first time. He is preparing for negotiation with Conpump, where a key issue will be the price of a sub - assembly. Given the unique nature of this sub - assembly, Chris expects to incorporate, into the contract, price reduction targets based on learning curve estimates.

While Chris does not have specific data for the Conpump, he has accumulated data for a sub - assembly that was similar in design and manufacturing complexity.

Units

Total Labour Hours

Average Labour    Learning Rate per Unit

1                           6

2                            10.5

4                           18.5

8                               32.2

16                              56.1

32                                 98.2

64                                 172.8

128                                      305.8

1. Overall average improvement rate:
2. Applicable learning curve:

Assignment:

Question 1. Given the above data, calculate the average labour per unit given the cumulative total hours provided.

Question 2. Calculate the appropriate learning rate and the overall average improvement rate for this data set.

Question 3. Are gains from learning realized early in production or at a later point? Explain?

Question 4. A learning curve applies to improvements in the direct labour portion of a process. How does the learning curve differ from the experience curve?