The direct labour times required to produce the first four units of a new product are shown below: Based on this data,the estimated learning or improvement rate is

Question

The direct labour times required to produce the first four units of a new product are shown below:  Based on this data,the estimated learning or improvement rate is

Quizplus · Accepted Answer

To calculate the estimated learning or improvement rate, we can use the formula: 
% increase in productivity = (time for first unit – time for nth unit) / time for first unit * 100

Using the data given, we can calculate the % increase in productivity for the second, third and fourth units:
For the second unit: (12 – 11) / 11 * 100 = 9.09%
For the third unit: (10 – 11) / 11 * 100 = -9.09% (note that the time decreased, so the % increase is negative)
For the fourth unit: (9 – 10) / 11 * 100 = -9.09%

To calculate the overall improvement rate, we can simply take the average of these three values:
(9.09% – 9.09% – 9.09%) / 3 = -9.09% / 3 = -3.03%

So the estimated learning or improvement rate is -3.03%, which means that as production of the new product increases, we can expect to see a slight decrease in the time required to produce each unit. Therefore, the best choice is C) 85%.

The Direct Labour Times Required to Produce the First Four