Will has just started a small company making special cakes for retirement parties. He just received a large order of five cakes from a local business. Will expects substantial productivity improvements in his work as he moves from the first cake in this order to the fifth cake. His current cost of making a cake is c (1) = 40 and he expects a learning rate of LR = 0.85. What will be his cost for all five cakes combined?

Question

Business

Britney Mason

28 June, 15:29

Will has just started a small company making special cakes for retirement parties. He just received a large order of five cakes from a local business. Will expects substantial productivity improvements in his work as he moves from the first cake in this order to the fifth cake. His current cost of making a cake is c (1) = 40 and he expects a learning rate of LR = 0.85. What will be his cost for all five cakes combined?

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Answers (2)

Know the Answer?

Lisa Collins · Answer 1

The solution for the cost for all five cakes combined is done below:

Explanation:

We start by looking up the cumulative learning curve coefficient in Table 6.4 for an output of 5 and a learning rate of LR = 0.85. We get:

CLCC (5,0.85) = 4.031086

We then compute the costs of making 5 units as:

CC (of making 5 units, LR = 0.85, c (1) = 40) = 40 * CLCC (5,0.85) = 40 * 4.031086 = 161.2434.

Moshe Berger · Answer 2

The cost for all five cakes is $161.24

Explanation:

aX^b

a = cost

X = number of cakes

b = log (rate) / log 2 = - 0.2344652536

lets take the fifth cake 40 + (5) ^-0.234465236 = 27.43

27.43

28.9

30.91

34

40

161.24