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Omega Technology is starting production of a new supercomputer for use in large research universities. They have just completed the first unit, which took 110 man-hours to produce. Based on their experience, they estimate their learning percentage to be 87 percent.

How many man-hours should they expect the second unit to require to manufacture? (Round your answer to 1 decimal place.)

Lambda Computer Products competed for and won a contract to produce two prototype units of a new type of computer that is based on laser optics rather than on electronic binary bits.

The first unit produced by Lambda took 5,000 hours to produce and required $250,000 worth of material, equipment usage, and supplies. The second unit took 3,500 hours and used $200,000 worth of materials, equipment usage, and supplies. Labor is $25 per hour. Use Exhibit 6.5.

a. Lambda was asked to present a bid for 10 additional units as soon as the second unit was completed. Production would start immediately. What would this bid be?

Cost for 10 more units $
Lazer Technologies Inc. (LTI) has produced a total of 20 high-power laser systems that could be used to destroy any approaching enemy missiles or aircraft. The 20 units have been produced, funded in part as private research within the research and development arm of LTI, but the bulk of the funding came from a contract with the U.S. Department of Defense (DoD).

Testing of the laser units has shown that they are effective defense weapons, and through redesign to add portability and easier field maintenance, the units could be truck-mounted.

DoD has asked LTI to submit a bid for 100 units.

The 20 units that LTI has built so far cost the following amounts and are listed in the order in which they were produced: Use Exhibit 6.4 and Exhibit 6.5.

1 $ 13.0 11 $ 4.8
2 9.5 12 4.7
3 8.2 13 4.5
4 7.1 14 4.4
5 6.7 15 4.2
6 6.2 16 4.1
7 5.8 17 3.9
8 5.5 18 3.9
9 5.2 19 3.8
10 5.0 20 3.8

a. Based on past experience, what is the learning rate? (Do not round intermediate calculations. Round your answer to the nearest whole percent.)

Learning rate %

b. What bid should LTI submit for the total order of 100 units, assuming that learning continues?

Cost for 100 more units $

c. What is the cost expected to be for the last unit under the learning rate you estimated?

Expected cost for last unit $

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