Learning curve - $200,000 for materials and $300,000 for labor It has agreed to accept a 10 profit based on cost and is willing to contract on the

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Learning Curve Problems 1. Captain Nemo, the owner of the Suboptimum Underwater Boat Company (SUB), is puzzled. He has a contract of 11 boats and has completed 4 of them. He has observed that his production manager, young Mr. Overick, has been reducing the number of people working on the contract. The first boat, for example, required 225 workers, while 45 fewer workers were required for the second boat. Overick has told them that “This is just the beginning!” and that he will complete the last boat in the current contract with only 100 workers. Overick is banking on the learning curve, but has he gone too far? 2. SUB has produced the first unit of a new line of minisubs at a cost of $500,000 -
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Unformatted text preview: $200,000 for materials and $300,000 for labor. It has agreed to accept a 10% profit, based on cost, and is willing to contract on the basis of a 70% learning curve. What will be the contract price for three minisubs? 3. A job applicant is being tested for an assembly line position. Management feels that steady-state times are reached after 1,000 performances. Regular assembly line workers are expected to perform the task within 4 minutes. If the job applicant performed the first test operation in 10 minutes and the second in 9 minutes, should this applicant be hired?...
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This note was uploaded on 09/29/2011 for the course MGT 3501 taught by Professor Chang during the Fall '10 term at Georgia Institute of Technology.

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