Girish Shambu and William Reisel are teammates at a discount store; their new job is assembling bicycles for customers. Assembly of a bike has a learning rate of $90 \%$. They forgot to time their effort on the first bike, but spent 4 hours on the second set. They have 6 more bikes to do. Determine approximately how much time will be (was) required for the 1st unit

A surgical procedure with a $90 \%$ learning curve required 20 hours for the initial patient. The fourth patient should require approximately how many hours?

a) 18

b) $16.2$

c) 28

d) 30

e) $54.2$

At this point, SMT representatives expressed great concern about the possibility of inflation in material costs. The IBM negotiators volunteered to include a form of price escalation in the contract, as previously agreed among themselves. IBM representatives suggested that if overall material costs changed by more than $10 \%$, the price could be adjusted accordingly. However, if one party took the initiative to have the price revised, the other could require an analysis of all parts and materials invoices in arriving at the new price.

Another concern of the SMT representatives was that a large amount of overtime and subcontracting would be required to meet IBM's specified delivery schedule. IBM negotiators thought that a relaxation in the delivery schedule might be possible if a price concession could be obtained. In response, the SMT team offered a $5 \%$ discount, and this was accepted. As a result of these negotiations, the SMT price was reduced almost $20 \%$ below its original bid price.

In a subsequent meeting called to negotiate the prices of certain pipes to be used in the system, it became apparent to an IBM cost estimator that SMT representatives had seriously underestimated their costs. He pointed out this apparent error because he could not understand why SMT had quoted such a low figure. He wanted to be sure that SMT was using the correct manufacturing process. In any case, if SMT estimators had made a mistake, it should be noted. It was IBM's policy to seek a fair price both for itself and for its suppliers. IBM procurement managers believed that if a vendor was losing money on a job, there would be a tendency to cut corners. In addition, the IBM negotiator felt that by pointing out the error, he generated some goodwill that would help in future sessions.

How does SMT's proposed learning rate compare with that of other industries?

Susan Sherer, an IRS auditor, took 45 minutes to process her first tax return. The IRS uses an $85 \%$ learning curve. How long will the 8th return take?

Susan Sherer, an IRS auditor, took 45 minutes to process her first tax return. The IRS uses an $85 \%$ learning curve. How long will the 4th return take?

Susan Sherer, an IRS auditor, took 45 minutes to process her first tax return. The IRS uses an $85 \%$ learning curve. How long will the 2nd return take?

Richard Dulski's firm is about to bid on a new radar system. Although the product uses new technology, Dulski believes that a learning rate of $75 \%$ is appropriate. The first unit is expected to take 700 hours, and the contract is for 40 units.

Assume that a worker works $2,080$ hours per year. How many workers should be assigned to this contract to complete it in a year?

Richard Dulski's firm is about to bid on a new radar system. Although the product uses new technology, Dulski believes that a learning rate of $75 \%$ is appropriate. The first unit is expected to take 700 hours, and the contract is for 40 units.

What is the average time to build each of the 40 units?

Richard Dulski's firm is about to bid on a new radar system. Although the product uses new technology, Dulski believes that a learning rate of $75 \%$ is appropriate. The first unit is expected to take 700 hours, and the contract is for 40 units.

What is the total amount of hours to build the 40 units?

If it took Boeing $28,718$ hours to produce the eighth 787 jet and the learning-curve factor is $80 \%$, how long did it take to produce the tenth 787 ?

Regional Power owns 25 small power generating plants. It has contracted with Genco Services to overhaul the power turbines of each of the plants. The number of hours that Genco billed Regional to complete the third turbine was 460. Regional pays Genco $\$ 60$ per hour for its services. As the maintenance manager for Regional, you are trying to estimate the cost of overhauling the fourth turbine. How much would you expect to pay for the overhaul of number 5 and number 6? All the turbines are similar, and an $80 \%$ learning curve is appropriate.

Central Electronics Corp. produces semiconductors and has a learning curve of .7. The price per bit is 100 millicents when the volume is $.7 \times 10^{12}$ bits. What is the expected price at $1.4 \times 10^{12}$ bits? What is the expected price at $89.6 \times 10^{12}$ bits?

Using the data from Problem E.14, how long will it take to complete the 12th plane? The 15th plane? How long will it take to complete planes 12 through 15 inclusive? At $\$ 40$ per hour, what can Alwan, as purchasing agent, expect to pay for planes 12 through $15 ?$

Suad Alwan, the purchasing agent for Dubai Airlines, is interested in determining what he can expect to pay for airplane number 4 if the third plane took 20,000 hours to produce. What would Alwan expect to pay for plane number 5 ? Number 6 ? Use an $85 \%$ learning curve and a $\$ 40$-per-hour labor charge.