Chapter 10, Problem 10.41P

Cost estimation, incremental unit-time learning model. Assume the same information for the Pacific Boat Company as in Problem 10-40 with one exception. This exception is that Pacific Boat uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. (A 90% learning curve means b = −0.152004.)

1. 1. Prepare a prediction of the total costs for producing the six PT109s for the Navy.

  Required

1. 2. If you solved requirement 1 of Problem 10-40, compare your cost prediction there with the one you made here. Why are the predictions different? How should Pacific Boat decide which model it should use?