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.If a contract for 30 units is canceled after the first 20 units, approximately how much of the expected total direct labor will have been expended to that point?
A)73 percent
B)55 percent
C)61 percent
D)50 percent
E)It is impossible to say without additional information.

Question

Quizplus · Accepted Answer

The learning curve effect suggests that the time required to produce subsequent units decreases at a predictable rate as workers gain experience. The reduction in time from the first to the second unit indicates a learning curve. To estimate the labor for the first 20 units, we can't calculate the exact amount without knowing the specific learning rate, but we can infer that a significant portion of the learning and efficiency gains occurs in the early units. Therefore, by the time 20 units are produced, a large portion of the total direct labor expected for 30 units would have been expended, likely more than half but less than the total. Given the options and without a precise way to calculate it due to lack of specific learning rate information, the best estimate with the information provided is that around 73 percent of the labor would have been expended, assuming the learning curve effect significantly reduces labor time per unit as production progresses. This is a conceptual explanation based on the information given; the exact percentage would require more detailed calculations based on the learning curve formula.

A Company Is Preparing a Bid on a Government Contract