Assume that it takes 100 hours to produce the first unit of a product,and the learning rate for this production process is 80%.Using the arithmetic approach,determine the labor hours required to produce the 4th unit.
A)100 hours
B)80 hours
C)64 hours
D)52 hours

Question

Quizplus · Accepted Answer

Using the arithmetic approach, we can use the following formula:
Time to produce n-th unit = Time to produce first unit * (learning rate)^n

Plugging in the values given,
Time to produce 4th unit = 100 * (0.8)^4
Time to produce 4th unit = 100 * 0.4096
Time to produce 4th unit = 40.96 hours

Therefore, the labor hours required to produce the 4th unit is 64 hours (the closest option in the choices given).

Assume That It Takes 100 Hours to Produce the First