Develops quick fat burning exercise machine

Assignment Help Operation Management

Reference no: EM132227325

Atkinson Engineering Company (AEC) develops quick fat burning exercise machine. This exercise machine can burn the fat very quickly with little effort. Gym Fitness Club (GFC) gave first order to supply 12 units. AEC produced and supplied these 12 units to GFC. Three factors involved, technical labor hours, assembly labor hours and cost of material. The first unit produced by AEC took 125 technical labor hours, 45 assembly labor hours and material cost was $1275 per unit. They determined learning rate of 70% in technical labor hours, and 85% in assembly labor hours. AEC pay $40 per hour to their technical labors and $30 per hour to their assembly labors.

Gym Fitness Club placed another order (1st follow-on contract) for 28 units immediately after receiving the first order. Learning in both factors continues and AEC pay rate to its labor and cost of material is not changed.

(a) What would be the total cost of this follow-on contract? 80504 DOLLARS

(b) What will be the cost of 10th unit of this follow on contract? 2948 DOLLARS

(c) GFC placed another order for 140 more units. Suppose there was significant delay between the second order and this follow-on order. During this time, equipment, personnel from technical and assembly department were released to other projects. AEC increased 15% pay rate of technical and assembly labors and cost of material increased by 20%.

(c-i) Assume that conditions are totally in AEC favour; that means the learning continues, what would be the total cost of this 2nd follow-on contract?

(c-i) Assume that conditions are totally not in AEC favour; that means the learning achieved by completing previous two orders didn’t continues at all, what would be the total cost of this 2nd follow-on contract?

Reference no: EM132227325

Questions Cloud

Determining appropriate integrated communication mix : Identify and analyze 4 factors that you consider are foremost in determining an appropriate integrated communication mix.

Communication in the digital age virtual session : After viewing the “Your Body Language” talk assigned for this “Communication in the Digital Age” virtual Session,

Currently positioned in the product life cycle : Identify where Moisturizing Black Soap Shampoo is currently positioned in the product life cycle.

Emotional intelligence in labor and delivery : What is your opinion of Dr. Jones’s emotional intelligence (EI)? Based on a scale of 1–10, with 1 being lowest, how would you rate Dr. Jones? Why?

Develops quick fat burning exercise machine : Atkinson Engineering Company (AEC) develops quick fat burning exercise machine.

Reasoning behind whole foods generic level strategy : What is the reasoning behind Whole Foods’ generic level strategy?

Responsible for the day to day operation of the restaurant : Santana is a manager at a local Tex-Mex restaurant where she is responsible for the day to day operation of the restaurant.

Extraordinary preparation when meeting client organization : Explain why a salesperson don't just need preparation but need extraordinary preparation when meeting the client organization?

What other processes can an airline examine : What other processes can an airline examine? why is each important?

User Account

All Pages