A company is preparing a bid on a government contract for 40 units of a certain product.The operations manager estimates the assembly time required for the first two units to be 10.4 hours and 8.8 hours,respectively.If the contract is cancelled after the first 20 units,approximately how much of the expected total direct labour will have been expended to that point?
A)58%
B)55%
C)61%
D)50%
E)It is impossible to say without additional information.

Question

Quizplus · Accepted Answer

The operations manager's estimates suggest that the assembly time decreases with each unit produced, indicating a learning curve effect. The learning curve formula can be used to estimate the time required for subsequent units and the total time for the first 20 units. Although the exact calculation requires more specific information about the rate of learning, the question implies that less than 100% but more than 50% of the labor will be expended by the halfway point due to the learning curve effect. Without doing the exact math, we can infer that a significant portion, but not all, of the labor will be needed for the first half of the units, making 58% a reasonable estimate given the options provided.

A Company Is Preparing a Bid on a Government Contract