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Dear John,
I am confused with the answer and approach of one question in BPP Kit.
Question:
A company began producing a new product in batches four months ago. When production commenced the first batch took 45 hrs. The actual learning rates observed were as follows.Month The batches produced to date Actual learning Rate
1 12 2 75%
3 4 75%
4 8 90%
What was the average production time per batch for the first 8 batches?
The correct answer is 22.78 hrs but I got 32.81 hrs.
My approaches are 45X0.9X0.9X0.9 or 45X8 square ()log0.9/log2).
Could you please tell me what’s wrong with my approaches? (I believe that calculating per unit time for production is about using formula approach – Xth production time or a specific unit production time)
Also, apart from this question, after watching your lecture, I am confused with the factors which may influence learning rate. As you know, lower learning rates indicate less time to produce the incremental volume of products. Should I assume both the economies of scale/improvement of production process and the overtime could level down the learning rate?
Thanks a lot!
Your answer assumes that the learning rate is 90% throughout, which is not the case – it is 75% initially.
Therefore the answer is 45 x 0.75 x 0.75 x 0.90
Economies of scale and overtime are not relevant. Learning relates solely to how quickly the labou speeds up. What effects it is things like workers leaving and being replaced by new ones who have to start learning again from the beginning.
Dear John,
Thanks a lot for your explanation!
For the learning rate, should we conclude that it can only be affected by the nature of labour (practice and whether they are new staff regardless the idle time)?
In addition, for the yield variance, I found that there are two methods of calculation.
1. We got the loss rate, actual output, actual input and standard mix proportions. We convert the output to the standard input and then calculate all variances for each components.
2. We got the actual input, loss rate, and actual output. We then calculate the variance of production between standard output and the actual output, which subsequently will be multiplied by the WEIGHTED output price.
From these two methods, is the second method reliable? I have seen one MCQ in BPP kit just adding all separate components’ price X volume to get weighted output price. Is this also acceptable?
Thank you once again for your support!
For the learning rate – yes, it is only affected by the labour.
With regard to the yield variance – yes, there are two ways of calculating it which both give the same answer. Provided you get the correct answer it does not matter which way you use.
I prefer the method in my free lecture on this, because I find it more logical and therefore easier to remember, but that is up to you.Dear John,
After watching your approaches of calculating price/expenditure + mix +yield variances, I found your methods are easy to memorise. However, I have a further question upon yield variance: If the loss rate has been provided, should I assume the loss rate is used only for getting standard usage in total?
For volume capacity and volume efficiency variances, should I focus it more for the exam as I have not seen a specific point for these two variances? Also, should I re-watch the variance analysis part as it has a fairly heavy module weighting?
Thanks a lot!
Please start a new thread if you are asking a question on a different topic – this has nothing to do with learning curves!
If you are given a standard loss rate, then yes – you need this to be able to calculate the standard usage and therefore the field variance.
I assume by volume capacity and efficiency variances, you are referring to the analysis of the fixed overhead variance. Although this is examinable at F5, it is extremely unlikely to be asked (because it is examiner at F2). Variance questions in F5 will almost certainly be almost entirely on either mix and yield, or planning and operational.
Dear John,
Thanks a lot!
I will be opening a new thread if i have further questions.
Have a nice weekend!
The total time to produce 4 is 100+70+59+55 = 284.
Therefore the average time per unit = 284/4 = 71 minutes.Since producing 4 involves doubling twice, then if the learning rate is R, then
100 x R^2 = 71
R = square root (71/100) = 84.26% (I don’t know what choices were available).You have got 85% presumably by just looking at the first two, which is fair enough. However, the more batches that are considered the more confident we would be about the learning rate.
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