1,A house builder has carpenters working on installing trim in the rooms of the

Question

1,A house builder has carpenters working on installing trim in the rooms of the homes. The builder has 30 homes with 5 rooms each to complete. Give that the learning curve of this process is 85%, and the first room takes 6 hours to complete what is the steady state time to finish a room?    Yx = aXb  

2,The same House Builder has a schedule for one of the homes of 8 weeks, with a budgeted cost of $175,000. The customer wants to move in in 5 weeks. The cost to crash this project of $250,000. What is the weekly crash cost of this home?   

Explanation / Answer

(1)

Time to complete the first room (a) = 6 hrs,
Learning rate (r) = 0.85
Learning curve coefficient (b) = Log(0.85)/Log(2) = -0.2345

So, Yx = 6*X-0.2345

For this problem, the value of X = 30*5 = 150

So, Y150 = 6*150-0.2345 = 1.85 hours. This is the cumulative average time to finish 150 rooms. For the 150th room, the time estimate is 150*Y150 - 149*Y149 = 1.42 hours

(2)

Weekly crash cost = (Crash Cost - Normal Cost) / (Normal time - Crash time)
= ($250,000 - $175,000) / (8 - 5) = $25,000

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