Mr. Emad has just returned from USA with new vision for taking decision regarding production process or any other operations. In his opinion, the learning curve and learning rate of workers are critical factors in deciding the profitability of any production plan. Moreover, he believes that it's very important to enhance the learning and skills of the workers and to have a yearly estimation for the learning curves of the company. Having such information may help any production manager in estimating the profitability of any given contract or offers or in planning any production lines. Mr. Emad has recently accepted a position as production manager for the Blue Ski Company – BSC.

Shortly after starting his new job, the president of the company approaches Emad with critical problem currently facing the company. The president gave the full authority to Emad to take the decision without referring to him. The problem is summarized in the following: the company has to satisfy a high demand of 60 units (very complicated unit) within two weeks. As they are in a shortage of time and labors, they have decided to subcontract most of their units. High-Mountain Company, XZ-Company and Al-Anash Company have offered to subcontract for the BSC. The following tables provide some information about the three subcontract offers:

Table (1.1)
High-Mountain Company
Cumulative production	Unit cost ($)
10	11000
20	9120
30	8340
40	5600
50	4300
60	3120
70	2900

Table (1.2)
XZ-Company
Cumulative production	Unit cost ($)
10	13000
20	11000
30	9400
40	8100
50	7300
60	5000
70	4600

Table (1.3)
AlNash Company
Cumulative production	Unit cost ($)
10	15000
20	13000
30	11000
40	9700
50	8400
60	7100
70	6400

Table (1.4) Information on the learning curve for the three companies

Company's Name	Learning rate	Time of the first unit (in hours)
High-Mountain	95%	15
XZ-Company	91%	13
AlNash	89%	11.5

     

The company can select two or more offers. At the end the units should be ready for BSC-Company within two weeks and with a minimum cost to maximize the company profit. Any delay in any unit, BSC-Company will be charged by $50 per unit. The price per unit is $410 and the fixed costs of the company include the following:

Table (1.5): Workers at Unit-X1

Rents	Electricity and other bills	Salaries and other expenses
$400	$100	$1000

Based on the above information, what do you think Emad's decision will be?

Answer rating: 100% (QA)

Since it is mentioned in the material that Mr Emads perspective on higher profitability i... View the full answer