Reference no: EM131755776

Jenny Wilson is a buyer at Flextron, a manufacturer of large industrial pumps. She has a requirement for a customized subassembly that a preferred supplier, Vistral, is building for the first time. She is preparing for negotiation with Vistral, where a key issue will be the price of the subassembly. Given the unique nature of this subassembly, Jenny expects to incorporate into the contract price reduction targets based on learning curve estimates. While Jenny does not have specific data for Vistral, she has accumulated data for a subassembly that was similar in design and manufacturing complexity.

            Total Labor    Average Labor          Learning

Units   Hours             per Unit                      Rate

1          6                      ———                         ******

2          10.8                 ———                         ———

4          19.2                 ———                         ———

8          35.2                 ———                         ———

16        64                    ———                         ———

32        115.2               ———                         ———

64        211.2               ———                         ———

128      384                  ———                         ———

Overall average improvement rate:               ———

Applicable learning curve:                              ———

Assignment Questions

1. Calculate the appropriate learning rate and the overall average improvement rate for this data set.

2. Plot the data on an X-Y chart. Label the X axis “Units Produced” and the Y axis “Average Labor per Unit.”

3. Are gains from learning realized early in production or at a later point?

4. A learning curve applies to improvements in the direct labor portion of a process. How does the learning curve differ from the experience curve?