Question 1

A time standard was set at 0.75 hours per unit based on the 50^th unit produced (i.e. Y₅₀ = 0.75). If the task follows a 95 percent learning curve, what would the expected time be for the 100^th, 200^th, and 400 the units? (you need to start with the books method using the tables to find the learning rate)

Question 2

Unit Research Associates (URA) has received a contract to produce five units of a new cruise missile guidance control. The first unit took 4,500 hours to complete and cost $50,000 in materials and equipment usage. The second took 3,000 hours and cost $46,500 in materials and equipment usage. For bidding purposes, labor cost is assumed to be $25/hour and an overhead rate of 20% added to materials and equipment costs.

The prime contractor is now asking URA to submit a bit for an additional 25 guidance controls.

1. What will the last unit cost to build?
2. What is the estimated average time for the 25 new units?
3. What is the total bid for the 25 new units and what would the cost per unit be?
4. The contractor was very happy with the price of the 5 prototype units provided and is accustomed to receiving a 15% discount for large orders, those over 20 units. Based on this status quo, what bid would you recommend and how much profit do you expect the company to make.

Question 3

Icarus Aircraft Company (IAC) is preparing to bid on 16 amphibious airliners of a type that it has never made before. The potential buyer is West Pacific Airlines, which plans to use the airliners to service small islands that do not have landing fields. The managers of Icarus believe that their major competitor, Birch Airplane Company, will bid $6 million per plane. The managers of Icarus want to earn an average contribution margin of $800,000 on the planes. They have developed the following estimates:

Materials and purchased parts, per plane $2,800,000

Labor and variable overhead for first plane 3,800,000

Learning effect on labor and variable overhead (per doubling) 85%.

1. What is the cost (labor and variable overhead (L&VOH) plus materials and purchased parts(M&PP)) of the 16^th aircraft?
2. What is the average L&VOH for all 16 aircraft?
3. What is the total cost of the 16 planes and will the contract meet the $800K contribution margin requirement?

Question 4

Us tree hugger types have gotten a great deal of encouragement from statements made by Mr. Kurzweil, a prominent Silicon Valley Billionaire, who is supremely confident installations of solar power will follow the same trajectory as computing power didthat is, doubling every 18 months to two years. However, these rosy estimates seem to have been slower to materialize than Mr. Kurzweil suggested. Installations of PVs in the US (Table 1) have been fueled by government subsidies and with the new political reality, there is reason to be concerned that the US solar industry will lose this support only to wither and die.

Table 1

Approximate History of Installed PV (in 2019 $s)

Year	Installed	$/installed
	Gig. Watts	Watt
2014	178.4	$4.55
2015	229.3	$3.75
2016	306.5	$3.45
2017	403.3	$3.15
2018	512.0	$3.08
2019	633.0	$2.98

Conventional wisdom suggests the tipping point price for solar power acceptance is $1.00 per installed watt. Please estimate how many gigawatts of panels will need to be installed to achieve that goal by:

1. Performing a log-log transformation of the installed capacity and cost per installed watt data.
2. Regress log($/Watt) on log(Gig Watts)
3. Provide an assessment of the quality of the fit
4. Use the intercept and slope from the regression to estimate Y1 and b.
5. Use a graph to compare your estimated cost/watt to those for 2014 to 2019.
6. Provide a rough estimate of how many gigawatts of solar power will have to be installed before the priced of solar power will be below $1/watt.