A construction project consists of 10 identical units. The cost of the first unit is $25,000, and

Question:

A construction project consists of 10 identical units. The cost of the first unit is $25,000, and a learning curve of 90% applies to the cost and the duration of consecutive units. Assume that the first unit takes 6 months to finish and that the project is financed by a loan taken at the beginning of the project at an annual interest rate of 10%. 

a. Should the units be constructed in sequence (to maximize learning) or in parallel (to minimize the cost of the loan)? 

b. Find the schedule for the 10 units that minimizes the total cost of the project.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Project Management Processes Methodologies And Economics

ISBN: 9780130413314

2nd Edition

Authors: Avraham Shtub, Jonathan F. Bard, Shlomo Globerson

Question Posted: