Case Study: Learning Curve Analysis for Business Development Course

This assignment delves into the application of learning curve analysis within a business development context. The solution begins by calculating the expected average time for the first two units and the approximate time for the 10th unit, considering an 85-percent learning curve. It then explor...Read More

The Really Big Weapons Company was asked to bid on the barrel assembly for the 30-mm
recoil-less rifle. The company estimates that it will take 10 hours to complete the 25th unit,
and based on historical data for similar barrel assemblies; an 85-percent learning curve is
expected. a. What is the expected average time for the first two units? b. What is the
approximate estimated time for the 100th unit?
Answer:
a. Base Unit = 10 direct labor hours
10/25=40%, F=1.2797 F*BU = 1.2397*10 labour hours = 12.39 direct labour hours for the
10th unit.
1/10 = 10%, F= 1.7158 F*BU=1.7158*12.39 labour hours = 21.25 direct labour hours for the
unit 1.
2/10=20%, F= 1.4584 F*BU = 1.5458*12.39 labour hours=18.06 direct labour hours for the
unit 2.
The expected average for the first two units is 19.65 hours [(21.25+18.06)/2]
b. PP = 110/10 = 1000%, F=.3058, F*BU=.3058*12.39 = 3.78 hours.
c. 90 percent learning curve
10/25 = 40%, F=1.1494 F*BU=1.1494*10 labour hours = 11.49 direct labour hours for the
10th unit.
1/10=10%, F=1.4191 F*BU=1.4191*11.49 labour hours=16.30 direct labour hours for the
unit 1.
2/10=20%, F=1.2772 F*BU=1.2772*11.49 labour hours=14.67 direct labour hours for the
unit 2.

A purchasing manager at a local manufacturing company was quoted an estimated time of 47
labor hours to produce a prototype for a new product. The supplier also estimated the learning
rate to fall between 82 and 85 percent. a. What percentage decrease should the purchasing
manager expect in required manufacturing by the fifth unit? b. Suppose an expected decrease
of approximately 37 percent over the first units was 30 percent. What should the purchasing
manager infer about the supplier’s efficiency?
Answer:
a. Base Unit=1, Direct labour hours=47
UIQ PLC PP F value Base Unit
Time
Expected
Time
%
Decrease
1 47
5 85 500% 0.6857 47 32.2279 0.3143
5 82 500% 0.5695 47 26.7665 0.4305
5 86 500% 0.7045 47 33.1115 0.2955
b. The actual learning curve rate is approximately 86%.