In practice, it is often found that the resources required to make a product decrease as production volumes increase. It costs more to produce the first unit of a product than it does to produce the one-hundredth unit. In part, this is due to economies of scale since costs usually fall when products are made on a larger scale. This may be due to bulk quantity discounts received from suppliers, is it not about this? It is not about cost reduction.

What about the time consumed by the labor when they perform the same task again and again. It is a human phenomenon that occurs because of the fact that people get quicker at performing repetitive tasks once they have been doing them for a while. The first time a new process is performed, the workers are unfamiliar with it since the process is untried. As the process is repeated, however, the workers become more familiar with it and better at performing it. This means that it takes them less time to complete it.

Required:

1. Read the above scenario carefully in question 2, identify the concept explained and evaluate briefly. 5 Marks

Scenario: 3

Astra company produces a single product. The first unit of a new product requires (choose between 150 to 180 hours in multiple of 5) to manufacture. It is anticipated that an 80% learning curve applies.

Required:

2. Use the data provided above about Astra company, identify 2 methods of the concept identified in (a) above and calculate cumulative average time and total time to produce 2 units and 8 units. 10 Marks