Reference no: EM132822384

BACKGROUND INFORMATION

In this module, you focus on the concept and principles of learning rates and customer value determination. In this assignment, you will be able to practice and develop your learning rate determination skills. This will help you to become proficient in determining and analyzing learning rates for a variety of scenarios.

This activity addresses the following Module Outcome:

Differentiate between alternative business processes utilizing the Plan-Do-Check-Act (PDCA) cycle, and various performance measures.(CO#1, CO#4)

PROMPT

View Learning Curve Calculator. This video demonstrates how to set up a Cumulative Average Model calculator in Excel. Then, complete the tasks for this activity.

TASKS

1. Create a Learning Curve Calculator similar to the one shown from the video Learning Curve Calculator.

2. Create a graph of Unit Cost versus Learning Rate for an initial unit cost of $100 and a production run of 1,000 units. Learning rate should vary from 0 to 100% and should use increments of 5%. Ensure you label the x- and y-axis and provide a graph title. The graph should be in its own worksheet. For help with moving the graph to a new sheet, go to How to Move a Chart onto a New Sheet in Excel.

3. Using the same data from question 2 (above), graph the Unit Number versus Cumulative Total Cost. Select two learning rates (Option A and Option B). Answer the following questions:

a. If each 5% increment of learning rate costs $1000, which option (A or B) would result in a low cost (Cumulative cost for 1,000 unit run added to the learning rate cost)?

b. Does your answer change if you do 50 runs in a year and the learning rate cost is a one-time cost? Explain why or why not.

c. Explain how you could use the PDCA cycle to reduce the Cumulative Total Cost. What are the tradeoffs to reducing Cumulative Total Costs?