C&A has a cumulative output of 1000 units and unit costs of $50 in 2005. A decad
ID: 2947082 • Letter: C
Question
C&A has a cumulative output of 1000 units and unit costs of $50 in 2005. A decade later, C&A has a cumulative output of 1500 units and unit costs of $40. The learning curve in a log-log graph is linear. By how much does C&A improve its unit costs with each doubling of cumulative output? (Use Table 6.2, it is attached)
TABLE 6.2 Relationship between the Learning Rate, LR, and the Slope of the Learning Curve in a Log-Log Graph (computed based on the relationship LR - 2Slope) Learning Rate Learning Rate Learning Learning Learning Slope Slope -0.51457 -0.49411 -0.47393 - 0.45403 - 0.4344 -0.41504 -0.39593 - 0.37707 -0.35845 -0.34008 Slope - 0.32193 - 0.30401 Slope 0.51 0.52 0.53 0.54 0.55 0.56 0.57 0.58 0.59 -0.97143 -0.94342 - 0.91594 -0.88897 - 0.8625 -0.8365 - 0.81097 ?0.78588 -0.76121 Rate 0.6 0.61 0.62 0.63 0.64 0.65 0.66 0.67 0.68 0.69 -0.73697 0.7 -0.7 1312 0.71 - 0.68966 0.72 - 0.66658 0.73 - 0.64386 0.74 -0.62 149 0.75 0.59946 0.76 - 0.57777 0.77 0.55639 0.78 -0.53533 0.79 Rate 0.8 0.81 0.82 0.2863 0.83 0.84 0.25154 0.85 0.23447 0.86 0.21759 0.87 0.20091 0.88 0.18442 0.89 -0.16812 Rate 0.9 0.91 0.92 0.93 0.94 0.95 - 0.96 0.97 0.98 0.99 Slope -0.152 - 0.13606 - 0.12029 ?0.1047 - 0.08927 ?0.074 - 0.074 - 0.04394 -0.0291 5 - 0.0145 -0.26882Explanation / Answer
C&A has a cumulative output of 1000 units and unit costs of $50 in 2005.
C&A has a cumulative output of 1500 units and unit costs of $40 in 2015
The learning curve in a log-log graph is linear.
A 32% C&A improve its unit costs with each doubling of cumulative output
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