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Hi All,
can somebody please assist me with the following…..
1. How to calculate the trend in time series analysis, and then use seasonal variation to calculate the cost.
2. Can somebody tell me in learning curve analysis what on earth Logr/Log2 is? i know r = the learning curve % but i have no idea where to get log or log2 from. also can you briefly explain how to answer a question using (logr/log2?
Any help on these matters would be greatly appreciated!
Nick
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1.You can get the trend by using linear regression equation or moving average,in exam you won’t be asked to do moving average but you might have to derived a linear regression equation(or given),maybe y=100+5x,then y is the trend and x is the time period,plug in the time period and you can get the trend.If your seasonal variation is given as additive model,then you just add the trend value with the seasonal variation to get the forecast.If you are given multiplicative model seasonal variation,then multiply the trend value with the seasonal variation. Remember to use the correct period’s seasonal variation,for example when forecasting for quarter 2,use quarter 2’s seasonal variation.
2.That is formula and will be given in exam,so just follow,give you one example:
A product requires 20 hrs of labour per unit at a cost of $6 per hour. A traditional labour standard would expect 4 units to be produced in 80 hrs at a labour cost of $480. If a 90% learning curve effect applies, then one would expect the 4 units to be completed in less time. How long will they require?
Answer: y = ax^b = 20 x 4^ (log 0.9/log 2) = 16 hours
Therefore, 4 units will require 64 hrs (16 x 4)
Conclusion: Based on the above, 64 hours will be the standard hours (rather than 80 hours) to compare with actual hours of producing 4 units when calculating the labour efficiency variance.Well hope it will help 🙂
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