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 4,250 hours and used $237,500 worth of materials, equipment usage, and supplies. Labor is $25 per hour. The company expects learning to occur relative to labor and also the pricing of parts from suppliers. Use Exhibit 6.5.

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?

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?

Exhibit 6.5 Improvement Curves: Table of Cumulative Values

Cumulative Improvement Factor
Unit	60%	65%	70%	75%	80%	85%	90%	95%
1	1.000	1.000	1.000	1.000	1.000	1.000	1.000	1.000
2	1.600	1.650	1.700	1.750	1.800	1.850	1.900	1.950
3	2.045	2.155	2.268	2.384	2.502	2.623	2.746	2.872
4	2.405	2.578	2.758	2.946	3.142	3.345	3.556	3.774
5	2.710	2.946	3.195	3.459	3.738	4.031	4.339	4.662
6	2.977	3.274	3.593	3.934	4.299	4.688	5.101	5.538
7	3.216	3.572	3.960	4.380	4.834	5.322	5.845	6.404
8	3.432	3.847	4.303	4.802	5.346	5.936	6.574	7.261
9	3.630	4.102	4.626	5.204	5.839	6.533	7.290	8.111
10	3.813	4.341	4.931	5.589	6.315	7.116	7.994	8.955
12	4.144	4.780	5.501	6.315	7.227	8.244	9.374	10.62
14	4.438	5.177	6.026	6.994	8.092	9.331	10.72	12.27
16	4.704	5.541	6.514	7.635	8.920	10.38	12.04	13.91
18	4.946	5.879	6.972	8.245	9.716	11.41	13.33	15.52
20	5.171	6.195	7.407	8.828	10.48	12.40	14.61	17.13
22	5.379	6.492	7.819	9.388	11.23	13.38	15.86	18.72
24	5.574	6.773	8.213	9.928	11.95	14.33	17.10	20.31
25	5.668	6.909	8.404	10.19	12.31	14.80	17.71	21.10
30	6.097	7.540	9.305	11.45	14.02	17.09	20.73	25.00
35	6.478	8.109	10.13	12.72	15.64	19.29	23.67	28.86
40	6.821	8.631	10.90	13.72	17.19	21.43	26.54	32.68
45	7.134	9.114	11.62	14.77	18.68	23.50	29.37	36.47
50	7.422	9.565	12.31	15.78	20.12	25.51	32.14	40.22
60	7.941	10.39	13.57	17.67	22.87	29.41	37.57	47.65
70	8.401	11.13	14.74	19.43	25.47	33.17	42.87	54.99
80	8.814	11.82	15.82	21.09	27.96	36.80	48.05	62.25
90	9.191	12.45	16.83	22.67	30.35	40.32	53.14	69.45
100	9.539	13.03	17.79	24.18	32.65	43.75	58.14	76.59
120	10.16	14.11	19.57	27.02	37.05	50.39	67.93	90.71
140	10.72	15.08	21.20	29.67	41.22	56.78	77.46	104.7
160	11.21	15.97	22.72	32.17	45.20	62.95	86.80	118.5
180	11.67	16.79	24.14	34.54	49.03	68.95	95.96	132.1
200	12.09	17.55	25.48	36.80	52.72	74.79	105.0	145.7
250	13.01	19.28	28.56	42.05	61.47	88.83	126.9	179.2
300	13.81	20.81	31.34	46.94	69.66	102.2	148.2	212.2
350	14.51	22.18	33.89	51.48	77.43	115.1	169.0	244.8
400	15.14	23.44	36.26	55.75	84.85	127.6	189.3	277.0
450	15.72	24.60	38.48	59.80	91.97	139.7	209.2	309.0
500	16.26	25.68	40.58	63.68	98.85	151.5	228.8	340.6
600	17.21	27.67	44.47	70.97	112.0	174.2	267.1	403.3
700	18.06	29.45	48.04	77.77	124.4	196.1	304.5	465.3
800	18.82	31.09	51.36	84.18	136.3	217.3	341.0	526.5
900	19.51	32.60	54.46	90.26	147.7	237.9	376.9	587.2
1,000	20.15	31.01	57.40	96.07	158.7	257.9	412.2	647.4
1,200	21.30	36.59	62.85	107.0	179.7	296.6	481.2	766.6
1,400	22.32	38.92	67.85	117.2	199.6	333.9	548.4	884.2
1,600	23.23	41.04	72.49	126.8	218.6	369.9	614.2	1001
1,800	24.06	43.00	76.85	135.9	236.8	404.9	678.8	1116
2,000	24.83	44.84	80.96	144.7	254.4	438.9	742.3	1230
2,500	26.53	48.97	90.39	165.0	296.1	520.8	897.0	1513
3,000	27.99	52.62	98.90	183.7	335.2	598.9	1047	1791