Principles of Logistics and Supply Chain Management
Question 1
The Minnesota Coach Company has just been given the following production schedule for ski-lift gondola cars. This product is considerably different from any others the company has produced. Historically, the companyâ€™s learning rate has been 90 percent on large projects. The first unit took 1,000 hours to produce.
Month Units
1             5
2             10
3             15
4             15
5             10
6             5
a. Estimate how many hours would be required to complete the 60th unit.
b. If the budget only provides for a maximum of 60 direct labor employees in any month and a total of 45,000 direct labor hours for the entire schedule, will the budget be adequate? Assume that each direct labor employee is productive for 150 work hours each month.

Question 2
A large grocery corporation has developed the following schedule for converting frozen food display cases to use CFC-free refrigerant:
Week Units
1          20
2          65
3          100
4          140
5          120
Historically, the learning rate has been 80 percent on such projects. The budget allows for a maximum of 40 direct labor employees per week and a total of 3,000 direct labor hours for the entire schedule. Assume 40 work hours per week. If the first unit took 30 hours to convert, is this schedule feasible? If not, how can it be altered? Are additional costs
involved in altering it?

Question 3
Mass Balance Company is manufacturing a new digital scale for use by large chemical companies has come up with a marketing hit. The original production run was for 400 units and these have been produced and shipped. Now, marketing has forecast a demand for an additional 200 units (â€œif the price is rightâ€). The first scale took 75 hours of direct labor and the second took 70 hours to complete. Per Adam Smith and his academic descendant Professor Culp we will assume the productâ€™s price contains the components material, labor, overhead, and profit at $150/labor hour expended.

a. What is the learning rate?
b. What is the estimated time for the 600th unit?
c. What was the estimated total time for producing the first 400 units?
d. What was the average selling price for the first 400 units?
e. What could be the average selling price for the next 200 units?
f. What kind of price discount would you recommend to marketing for the next 200 units under consideration?

Principles of Logistics and Supply Chain Management Question 1 T...