Question
You have been studying the production of the gadget. You completed the first production run of 15 units. During the first production run you noticed
You have been studying the production of the gadget. You completed the first production run of 15 units. During the first production run you noticed that there were clear improvements in efficiency taking place. You decide that you would collect some cost data for the second run. At the end of the second run you are given the information presented in the following table.
Lot Unit | Costs |
1 | $74.20 |
2 | $71.92 |
3 | $73.22 |
4 | $71.77 |
5 | $71.26 |
6 | $70.21 |
7 | $70.55 |
8 | $70.95 |
9 | $70.30 |
10 | $69.10 |
11 | $70.06 |
12 | $68.72 |
13 | $69.17 |
14 | $68.36 |
15 | $68.93 |
16 | $68.10 |
17 | $66.96 |
18 | $67.34 |
19 | $66.42 |
20 | $67.34 |
Calculate the average cost per unit for this production lot.
Estimate the learning rate from the costs provided. (Note: There are two ways to go about this; both requiring a little creativity. Think either of using a visual approach or the Wright equation.
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