Problem 1
X-Terrain Vehicles manufactures special-purpose all-terrain vehicles primarily for the military and government agencies in Canada and for foreign governments. The company is planning to bid on a new all-terrain vehicle specially equipped for desert military action. The company has experienced an 80% learning curve in the past for producing similar vehicles and assumes that the learning period is completed after the production of 30 units (hence no more learning effects after that). Based on a prototype model, the company estimates that the first vehicle produced will require 1600 hours of direct labor. The order is for 60 all-terrain vehicles (10 each over a six-month period).
- a) Determine the time that will be required for the 30th and 60th units (Note the relationship between the time that will be required for the 30th and 60th units).
- b) If the company is planning to allocate 180 employees for the duration of the project (with the average weekly labor hours of an employee being around 40 hours), is the production plan feasible? If not, recommend a feasible plan.
Problem 2
X-Terrain Vehicles is also considering making a bid for a mobile rocket-launching system for the military. However, the company has almost no experience in producing this type of vehicle. In an effort to develop a learning curve for the production of this new mobile weapon system, management has called contacts from several former competitors who went bankrupt. Although management could not obtain direct learning curve rates, they did learn from one contact that for a system with similar features, the first unit required 2200 hours of direct labor to produce and the 30th unit required 810 hours to produce.
The company will use their facility in Montreal for the production of the mobile rocket- launching units. They are considering fully dedicating the facility and their 60 full-time employees for the duration of the project. The average weekly labor hours of an employee are 40 hours. If the bid is for 50 mobile rocket-launching units, how soon can the company promise the delivery of these 50 units?