Question

Northern Advanced Technology Company (NATC) has developed a new product that includes the production of a complex part. The manufacture of this part requires a high degree of technical skill. Management believes there is a good opportunity for its technical force to learn and improve as they become accustomed to the production process. The production of the first unit requires 10,000 direct labor hours. Management projects a 90% learning curve and wants to produce a total of 16 units.

Required:

1. Discuss the assumption of learning curve analysis.
2. Identify at least three limitations for learning curve analysis.
3. After completing the first unit, the estimated total direct labor hours NATC will require to produce the additional 15 units will be?
4. Upon the completion of the 16^th units,
   1. NATC cumulative direct labor hours will be?
   2. NATC cumulative average direct labor hours required per unit of the product will be?

Answer 1

1. Following are the assumption of learning curve

A. Learning constant is assumed to be known in advance.

B. It is assumed that learning will going on at constant rate irrespective of level of production.

C. Learning cute is appliable where work is new or work man is new.

2. Following are limitation of learning curve analysis

A. In most cases we passie that time or cost is half on doubling production. It may not always true in real situation.

B. If there is High turnover rate in factory then learning curve will not apply.

C. Accurate learning curve data will not be available in real life situation in advance to you.