A contractor builds large ships for the Department of Defense. A recent contract called for 12 amphibious landing platforms. It was originally estimated that the first of these would cost $1 billion and that 80 percent learning would be appropriate. In fact, the first ship cost $1.6 billion and the second $1.12 billion. What is the revised learning curve? What will be the total cost of the 12 ships? Is it higher or lower than the original estimate? If the defense department cuts the contract from 12 ships to 9, what happens to the average cost per ship?

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The Answer of A contractor builds large ships for the Department of Defense. A recent contract called for 12 amphibious landing platforms. It was originally estimated that the first of these would cost $1 billion and that 80 percent learning would be appropriate. In fact, the first ship cost $1.6 billion and the second $1.12 billion. What is the revised learning curve? What will be the total cost of the 12 ships? Is it higher or lower than the original estimate? If the defense department cuts the contract from 12 ships to 9, what happens to the average cost per ship?

A Contractor Builds Large Ships for the Department of Defense