The production for a new product follows: The first unit will take 2,000 hours to produce and the learning rate is 90 percent.Currently,the company employs 40 workers,who each work 200 hours regular time per month.In which months will overtime be needed for the production schedule shown? Refer to the copy of Table I.1 appended to this exam.
A)month 4 only
B)months 3 and 4 only
C)months 1 and 2 only
D)month 1 only

Question

The production for a new product follows:  The first unit will take 2,000 hours to produce and the learning rate is 90 percent.Currently,the company employs 40 workers,who each work 200 hours regular time per month.In which months will overtime be needed for the production schedule shown? Refer to the copy of Table I.1 appended to this exam.
A)month 4 only 
B)months 3 and 4 only 
C)months 1 and 2 only 
D)month 1 only

Quizplus · Accepted Answer

To determine if overtime will be needed for each month, we need to calculate the number of hours needed to produce one unit and compare it to the number of regular hours worked by the 40 employees in each month.

First, we need to calculate the time it takes to produce each unit using the learning curve formula:

Time per Unit = (First Unit Time) x (Total Units Made)^(log(learning rate)/log(2))

Time per Unit = 2,000 x (1)^(log(0.90)/log(2))
Time per Unit = 2,000 hours

Next, we need to calculate the number of regular hours worked by the 40 employees in each month:

Regular Hours per Month = (Number of Employees) x (Hours per Employee)

Regular Hours per Month = 40 x 200
Regular Hours per Month = 8,000 hours

Finally, we can determine if overtime is needed by comparing the time per unit to the regular hours per month:

Month 1:
Time to produce one unit is 2,000 hours, which is less than the regular hours per month of 8,000 hours. No overtime is needed.

Month 2:
Two units need to be produced, so total time needed is 2,000 x 2 = 4,000 hours. This is less than the regular hours per month of 8,000 hours. No overtime is needed.

Month 3:
Four units need to be produced, so total time needed is 2,000 x 4 = 8,000 hours. This is equal to the regular hours per month of 8,000 hours. No overtime is needed.

Month 4:
Eight units need to be produced, so total time needed is 2,000 x 8 = 16,000 hours. This is greater than the regular hours per month of 8,000 hours. Overtime is needed.

Therefore, overtime will be needed in month 4. The best choice is B, as both months 3 and 4 require calculations to determine overtime.

The Production for a New Product Follows: the First