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Johnson Industries received a contract to develop and produce four high-intensity long-distance receiver/transmitters for cellular telephones. The first took 2,200 labor hours and $40,000 worth of purchased and manufactured parts; the second took 1,560 labor hours and $32,400 in parts; the third took 1,320 labor hours and $29,000 in parts; and the fourth took 1,076 labor hours and $25,600 in parts.

Johnson was asked to bid on a follow-on contract for another dozen receiver/transmitter units. (Hint: There are two learning curves—one for labor and one for parts.) Use Exhibit 6.5.

a. How many labor hours should Johnson estimate are needed for the additional 12 units? (Round your answer to the nearest whole number.)

b. How much should Johnson estimate the parts cost will be for the additional 12 units? (Round your answer to the nearest dollar amount.)

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Operation Management, Management Studies

Category:- Operation Management
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