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 c First, search Table E.3 for the fourth unit and a learning-curve rate of 85%. The learning-curve coefficient, C, is .723.