Kelly-Lambing, Inc., a builder of government-contracted small ships, has a steady work force of 10 very skilled craftspeople. These workers can supply 2,500 labor-hours each per year. Kelly-Lambing is about to undertake a new contract, building a new style of boat. The first boat is expected to take 6,000 hours to complete. The firm thinks that 90% is the expected learning rate.

(a) What is the firm’s “capacity” to make these boats—that is, how many units can the firm make in 1 year?

(b) If the operations manager can increase the learning rate to 85% instead of 90%, how many units can the firm make?