Case I.1
The production schedule for a new product follows.

The first unit took 100 hours to complete, and the rate of learning is 80 percent. Each employee works 40 hours per month.
-Using the information in Case I.1, how much time will it take to produce the units in month 1?
A) fewer than 800 hours
B) greater than or equal to 800 hours but fewer than 1,100 hours
C) greater than or equal to 1,100 hours but fewer than 1,500 hours
D) greater than 1,500 hours

Question

Case I.1
The production schedule for a new product follows.
  
The first unit took 100 hours to complete, and the rate of learning is 80 percent. Each employee works 40 hours per month.
-Using the information in Case I.1, how much time will it take to produce the units in month 1?
A) fewer than 800 hours 
B) greater than or equal to 800 hours but fewer than 1,100 hours 
C) greater than or equal to 1,100 hours but fewer than 1,500 hours 
D) greater than 1,500 hours

Quizplus · Accepted Answer

The rate of learning is 80 percent, which means that each unit will take 80% of the time of the previous unit. Therefore, the second unit will take 80% of 100 hours, which is 80 hours. The third unit will take 80% of 80 hours, which is 64 hours.

In month 1, the employees work 40 hours each, providing a total of 40*4=160 hours of labor. To determine how many units can be produced in this time, we add up the times for the units until we exceed 160 hours.

The first unit takes 100 hours, the second takes 80, and the third takes 64. Totaling these gives us 100+80+64=244 hours. This means that only one unit can be completed in the first month.

Therefore, the total time required for the first unit is 100 hours, so the answer is B: greater than or equal to 800 hours but fewer than 1,100 hours.

Case I.1 The Production Schedule for a New Product Follows