Answer Problem #2:

Assume the customer has ordered 75 units to be delivered in batches of 25 units each starting next week. Based on your history of making the first 25 units and not knowing for certain if you can continue on this learning curve, what do you think is an appropriate time in hours to allot for the production of each unit moving forward? How many hours do you think would be required for the entire 75 units?

Problem #1:

A production lot of 25 units required 103.6 hours of labor effort. Your accounting records indicate that the first unit took 7 hours to finish. What is the learning rate on this production lot?

Explanation- Average hour per unit = 103.6 hours/25 units

Production lot = 25 units

Time required for production lot = 103.6 hours

Time required for first unit = 7 hours

Learning rate = ?

Average hours per unit for production lot = 103.6/25 = 4.144 hours

Time variance of 1^st unit from mean = 7 hours 4.144 hours = 2.856 hours

Learning Rate = variance of 1^st unit/average unit time = 2.856/4.144 = 0.68918

Learning rate = 68.92%.

Learning rate = 69%