MGMT-6082 Module 9: Analysis of Learning Curves and Quantity Discounts

This assignment solution for MGMT-6082, Module 9, presents a detailed analysis of learning curves and quantity discounts. The first part calculates the average labor per unit based on cumulative total hours, determines the learning rate (90% in this case), and discusses the implications of learning curve gains, highlighting that intense improvement is realized early in production. It differentiates between learning and experience curves, emphasizing the learning curve's role in purchase volume consolidation. The second part performs a quantity discount analysis, calculating total and incremental costs for different order quantities. It identifies the optimal order quantity based on lowest incremental cost, addresses an unusual aspect of the quote, and outlines the buyer's considerations for determining the purchase quantity, referencing Monczka et al. (2015). The assignment provides a comprehensive understanding of these critical business concepts.

MGMT-6082-18F Module 9 - Learning Curve Analysis Exercise
Given the above data, calculate the average labour per unit given the cumulative total
hours provided.
Units Total labour
hours
Average labour
per unit
Learning rates
1 6 6
2 10.8 5.4 10
4 19.2 4.8 11.1111111
8 35.2 4.4 8.33333333
16 64 4 9.09090909
32 115.2 3.6 10
64 211.2 3.3 8.33333333
128 384 3 9.09090909
Total 65.959596
Average 9.42279942
Calculate the appropriate learning rate and the overall average improvement rate for this
data set.

Average improvement rate = 10% or
Applicable learning curve = 90%
Are gains from learning realized early in production or at a later point? Explain?
This analysis shows that the supplier has an approximately 90% learning curve for this item, it
will therefore mean that the direct labor that is required in production of a unit will decrease by
an average of 10% the moment the production will double. From the calculation of learning rate
it shows clearly that the intense learning improvement by the producer is realized at the second
early volume, this is a point where the learning rate effect is greatest..
A learning curve applies to improvements in the direct labour portion of a process. How
does the learning curve differ from the experience curve?
According to Monczka et al (2015) learning curve analysis mainly used to emphasize on the key
points that shows why many buyers usually consolidate the volume of purchase by few suppliers.
A Wise purchaser always will be aware that a low purchase price will be achieved if he or she
incorporates the idea of learning curve at the point where production volume increases.
Therefore, learning curve is mainly used in analyzing the reduction on the required number of
hours by the direct labors during when the job is being learned by the workers. While experience
curve will apply to both intensive labor situation and also the progress of the orientation.

MGMT-6082 – 18F Module 9 - Quantity Discount Analysis Exercise
Using the format illustrated in Chapter 12, calculate a quantity discount analysis for a
quote using specific quantities.
A B C D E
Number of units per order 0 1 2 5 10 13
Price per unit (quoted price) 0 23 19 17 13 12
Total p[rice per order 0 23 38 85 130 156
Price difference between orders 23 15 47 45 26
Quantity difference between orders 1 1 3 5 3
Price per unit per order quantity difference $23 $15 $15.7 $9 $8.7
Quantity Total cost Incremental quantity Incremental cost
1 $23 1 $23
2 $38 2 $15
5 $85 3 $15.7
4 $15.7

5 $15.7
10 $130 6 $9
7 $9
8 $9
9 $9
10 $9
13 $156 11 $8.7
12 $8.7
13 $8.7
What quantity should Piet order if he wants to receive the lowest incremental costs between
quantities?
The quantity to be ordered will be 13 which has a lowest increment cost 0f $8.7
Is there anything unusual about this quote?
When using quantity discount analysis, the key calculation is the incremental cost of each
additional unit at different quantity levels. Even though the original quote at the four quantity
levels moves lower on a per-unit basis, the incremental cost for units 3-5 ($15.7) is actually
higher than for units 2 ($15).
What must a buyer consider when determining what quantity to purchase?

According Monczka et al (2015) buyers will always consider the quotes that will incorporate low
incremental cost, when there is an increase in volumes unless there is a valid explanation
provided by the supplier.
Reference
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and
supply chain management. Cengage Learning, 441 – 449.