$5$

Lambda Computer Products competed for and won a contract to produce two

prototype units of a new type of computer that is based on laser optics rather

than on electronic binary bits.

The first unit produced by Lambda took $5,000$ hours to produce and required

$$250,000$ worth of material, equipment usage, and supplies. The second unit

took $3,750$ hours and used $$212,500$ worth of materials, equipment usage,

and supplies. Labor is $$30$ per hour. The company expects "learning" to occur

relative to labor and also the pricing of parts from suppliers. Use Exhibit $6\mathrm{.}5.$

a$.$ Lambda was asked to present a bid for $10$ additional units as soon as the

second unit was completed. Production would start immediately. What

would this bid be$?$ $$2,283,250$

b$.$ Suppose there was a significant delay between the contracts. During this

time, personnel and equipment were reassigned to other projects. What

would the new bid be$?$

$$2,617,350$

Explanation

a$.$ First, estimate the labor and material cost learning percentages $($two different percentages$)$ by