Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN: 9781285869681
Author: Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher: Cengage Learning
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Chapter 12, Problem 1DQ
Summary Introduction

To explain: The reason why learning curve mainly applies to direct labor rather than indirect labor.

Purchasing and supply chain analysis tools and techniques:

It is essential for possessing the right tools and techniques in supply chain management. It is very essential to ensure that the organization always chooses toe right supplier for their organization. There are many tools and techniques such as project management, learning curve, process mapping, and others.

Expert Solution & Answer
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Explanation of Solution

The learning curve is the rate of improvement in the production process or efficiency due to the knowledge gained over time in a particular course of action. Direct labor affects the time taken to develop directly. Indirect labor does not have a direct impact on the development of a product.

Learning curve applies only to the direct labor time involved in developing a product. Usually, a product development time is reduced by cutting the direct labor time with the help of the learning curve. Therefore, there is only one labor associated with the labor curve.

Hence, learning curve mainly applies to direct labor rather than indirect labor.

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The annual demand for water bottles at Mega Stores is 500 units, with an ordering cost of Rs. 200 per order. If the annual inventory holding cost is estimated to be 20%. of unit cost, how frequently should he replenish his stocks? Further, suppose the supplier offers him a discount on bulk ordering as given below. Can the manager reduce his costs by taking advantage of either of these discounts? Recommend the best ordering policy for the store. Order size Unit cost (Rs.) 1 – 49 pcs. 20.00 50 – 149 pcs. 19.50 150 – 299 pcs. 19.00 300 pcs. or more 18.00
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