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It is in respect to the Big Cheese chairs (dec 2009) question.
Using the formula we can get the average hour per unit like this:
Average hour per unit = 2 hrs (128)^-0.074000581 = 1.3966
Total hours = 1.3966 x 128 = 178.77This explains that to make the 128 unit of chair it will take on average 1.3966 hours per unit.
However, the total time to make 128 units of chairs it will take 178.77 hours in total.
To calculate the labour cost per chair is = 1.3966 hrs per unit x $15 = $20.95
As you said in your lecture that we cannot be asked to calculate time for 120 or 126 units because with the doubling rule we can calculate them because they don’t come in doubling the range of the unit.
I do not say that at all in my lecture!!!
If it is not doubling then you need to use the formula, and I work through an example using the formula.
Is it true that with the doubling rule we can calculate the average hour per unit to produce each unit but it is used only when the total units (cumulative output) comes in doubling range such as (1, 2, 4, 8, 16, 32, 64, 128, 256, 512 and so on)?
But formula can be used anyways but it is best to use the formula approach when the total units (cumulative output) do not come in doubling range such as (3,4,7,9,15,17,31,33,63,65,127,129,511,513 and so on).
Is that correct now?
Thanks again.
Is it also true that the higher the learning rate is the slower labour learning is because employees are taking longer to learn.
A learning rate of 70% means faster learning of labour than a learning rate of 90%
A learning rate of 90% means that labour is taking more hours to make the production due to either because new employees are hired or we are having problems in the production process.
We can reduce the learning rate by employing professional or skilled labour even though it might be costly.
What I wrote is true?
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