1.You have just received 10 units of a special subassembly from an electronics manufacturer at a price of $250 per unit. A new order has also just come in for your company's product that uses these subassemblies, and you wish to purchase 40 more to be shipped in lots of 10 units each.

a?Assuming a 70 percent learning curve by your supplier on a similar product last year, how much should you pay for each lot? Assume that the learning rate of 70 percent applies to each lot of 10 units, not each unit.
b?Suppose you are the supplier and can produce 20 units now but cannot start production on the second 20 units for two months. What price would you try to negotiate for the last 20 units?

2.Johnson Industries received a contract to develop and produce four high-intensity long-distance receiver/transmitters for cellular telephones. The first took 2,000 labor hours and $39,000 worth of purchased and manufactured parts; the second took 1,500 labor hours and $37,050 in parts; the third took 1,450 labor hours and $31,000 in parts; and the fourth took 1,275 labor hours and $31,492 in parts.
Johnson was asked to bid on a follow-on contract for another dozen receiver/transmitter units. Ignoring any forgetting factor effects, what should Johnson estimate time and parts costs to be for the dozen units?