READ the two learning curve articles.
THEN In detailes answer the following 3 questions.
- Instead of an 80% learning curve, the supplier believes that either a 85% or 90% learning curve will be more indicative of what will occur in the future (starting at unit 51). What would be the unit cost of labor for the next 350 units using a 85% learning curve and a 90% learning curve? Show calculations that use the formulas that are provided in the posted learning curve articles.
- What would be the total price ABC should pay for the 350 units for an 80% learning curve for labor, for a 85% learning curve, and for a 90% learning curve for labor? What % difference is this between the two assumptions of learning curves?
- What suggestions should ABC make to the supplier in order for the supplier to incur cost reductions at the 80% learning curve level?