It took 60 hours to make the first unit of a product. After the second and third units were made, the learning curve was estimated to be 80%. At $10 per hour, estimate the labor bill for the fourth unit. (Use at least three decimals in the exponent if you use the formula approach.)
A) $400 or less
B) from $400 to $420
C) from $420 to $440
D) from $1800 to $2000
E) over $2000

Question

Quizplus · Accepted Answer

The labor time for the fourth unit can be calculated using the learning curve formula: T_n = T_1 * n^(log(b)/log(2)), where T_n is the time required to produce the nth unit, T_1 is the time required to produce the first unit, n is the unit number, and b is the learning rate (in decimal form). For the fourth unit (n=4) with an 80% learning curve (b=0.8), the formula becomes T_4 = 60 * 4^(log(0.8)/log(2)). This calculates to approximately 38.4 hours. At $10 per hour, the labor bill for the fourth unit is $384, which is $400 or less.

It Took 60 Hours to Make the First Unit of a Product