Assignment
1. Learning Curve A
Units Total Labor Hrs Avg Labor per Unit To Produce Learning Rate% 1 6 6 --- --- 2 10.8 5.4 -0.6 -0.8 4 19.2 4.8 -0.6 -0.8 8 35.2 4.4 -0.4 -0.8 16 64 4 -0.4 -0.8 32 115.2 3.6 -0.4 -0.8 64 211.2 3.3 -0.3 -0.8
128 384 3 -0.3 -0.8 -5.6 = -56% AVG IMP. Rate Learning Curve =100-(-56) % =99.44%

3) A Plot of X-Y Chart, as X is Units Produced and Y is Average Labor per Units x (Units Produced) y (AVG Labor Per Unit)
0 6
-0.6 10.8
-0.6 19.2
-0.4 35.2
-0.4 64
-0.4 115.2
-0.3 211.2
-0.3 384

This analysis shows that the Supplier has approximately 99 Percent learning Curve for this item, it also explains that as production doubles, the direct labor should decrease 1 percent on average. The learning rate is -0.8 which is -8percent and less than 1 percent decrease in labor.
Conclusively, this indicates that there was no learning at all, in this case note because the learning curve is close to 100 percent.

4)Gains from Learning curve are realized

5)
The difference between them is that learning Curve is a micro concept because it deals with the rate of improvement due to learning as per reduction in average direct labor hours to produce a unit.
These are used to prepare cost estimates, bidding on special orders, setting labor standards, scheduling labor requirements and evaluating labor performance.
On the other hand Experience Curve is a macro concept that has to do with total Production, total output of any function such as Manufacturing, marketing and distribution. It is the long term factors of production that reduces production cost systematically.
Both concepts have differences but are based on the idea that the time required to perform a task decreases as a worker gains experience.

6)
Factors prohibiting a supplier from realizing learning curve gains are:
a) If the labor involved is not a direct one and is a none repetitive job, example is craftsman jobs.
b) Changing employees frequently alters the gains of learning curve.
c) Forgetting factor too affects negatively depending on the amount learned and length of of interruption.
d) Changes in Product design, raw material usage.
e) A change in the ratio of of direct labor and automation.
f) Lack of systems and process maintenance can negative affect the learning rate.
7)
A preferred Supplier is a vendor that consistently meets the buyer’s supply chain stringent performance criteria. Such a vendor has demonstrated its capability and capacity to perform similar transactions or contracts and the end of the day receives preferences during supplier selection process.
These types of vendors are grouped and put on a list or supplier management inventory which buyers call preferred supplier list.
Advantages of preferred Supplier list are:
a) It eliminated the need to perform a time consuming evaluation.
b) The list is used by buyers to reward the selected suppliers.
c) It can also be used to improve the existing suppliers’ performances.
d) It helps simplifies the supplier evaluation and selection process.

8)
A Collaborative Supply chain relationship is the kind of relationship that supports the Buyer and Supplier working together to mutually benefit from a learning curve.

2) Learning Curve B.
1)
Material $100
Direct Labor $50
Overhead $75
Total cost $225
Profit (25%) $56 $281
Then for 85% it will be
Material $100
Direct Labor $50
Overhead $75
Total cost $225
Profit (15%) $33.75 $258

b) Per unit estimate cost for the next 700 pieces is
Pieces AVG per piece Total hrs
100 5 500
200 4.25 850
400 3.61 1444

100 + 200 + 400 =700
500 + 850 + 1444 =2794
700 pieces = 2794 labor hrs,
2794 hrs x 10 hrs
= $27,940
$27,940 / 700 pieces = 39.91
Therefore per unit cost is $ 39.91 per unit. 2) Learning Curve can be used in certain conditions to estimate Prices.
a) It is used when a supplier uses a new production process or produces a new item for the first time or a new design product.
b) When a supplier produces a technically complex item for the first time
c) It is applied when an item has high direct labor content
d) When Human efforts involved are constant for a longtime.
e) Accurate collection of cost and labor data should be present at the initial stage of production.

3)

4) Manual process experience greater learning curve than automated process because,
In automated process machine and automation drives the process entirely. It gives room for less learning rate due to lack of direct Labor. Meanwhile the manual process results in greater cost control.

5)
Yes there are Factors other than learning that can reduce cost as volume increases are:
a) Process change, Modification of production process.
b) Substitute increased automation of labor.
c) Pursue vertical integration
d) Update process technology
e) Offering a supplier long term purchase contract with guaranteed volumes.