Suppose that you are the assigning costs to a major project to be undertaken thi

Question

Suppose that you are the assigning costs to a major project to be undertaken this year by your firm, University Applications. One particular coding process involves many labor-hours, but highly redundant work. You anticipate a total of 200,000 labor-hours to complete the first iteration of the coding and a learning curve rate of 70%. You are attempting to estimate the cost of the twentieth iteration of this coding sequence.

Based on this information and a $60 per hour labor rate, what would you expect to budget as

A. The cost of the twentieth iteration?

B. The cost of the fortieth iteration?

Explanation / Answer

Solution:

Learning curve rate = log (0.7) / log (2) = -0.515

Time to complete 20th iteration = 200,000 x [20 ^ (-0.515)] = 42756 labor hours

Time to complete 40th iteration = 200,000 x [40 ^ (-0.515)] = 29920 labor hours

Cost of complete 20th iteration = 42756 x $60 = $2,565,360.00

Cost of complete 40th iteration = 29920 x $60 = $1,795,200.00

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.