Refer to Example E2. If the learning factor improved to 75%,

1) How would the cost change?

It would drop to $__________________________

2) What would be the total cost to make all four boats?

$___________________________________________

It took a Korean shipyard 125,000 labor-hours to produce the first of several tugboats that you expect to purchase for your shipping company, Great Lakes, Inc. Boats 2 and 3 have been produced by the Koreans with a learning factor of 85%. At $40 per hour, what should you, as purchasing agent, expect to pay for the fourth unit? APPROACH > First, search Table E.3 for the fourth unit and a learning-curve rate of 85%. The learning-curve coefficient, C, is .723 . SOLUTION To produce the fourth unit, then, takes: TNT4=T1C=(125,000hours)(.723)=90,375hours To find the cost, multiply by $40 : 90,375hours$40perhour=$3,615,000 INSIGHT The learning-curve table approach is very easy to apply. If we had not factored learning into our cost estimates, the price would have been 125,000 hours $40 per hour (same as the first boat) =$6,000,000. LEARNING EXERCISE > If the learning factor improved to 80%, how would the cost change? [Answer: It would drop to $3,200,000.] RELATED PROBLEMS E.1, E.2, E.3a, E.5a,c, E.6a,b, E.9, E.10, E.11, E.14, E.16, E.22 (E.26, E.27, E.28, E.30, E.31 are available in MyOMLab) EXCEL OM Data File ModEExE2.xIs can be found in MyOMLab. ACTIVE MODEL E.1 This example is further illustrated in Active Model E.1 in MyOMLab