Baya Power owns 25 small power generating plants. It has contracted with Yaguez

Question

Baya Power owns 25 small power generating plants. It has contracted with Yaguez Services to overhaul the power turbines of each of the plants. All the turbines are similar and an 80% learning curve is appropriate. The number of hours that Yaguez billed Baya to complete the second turbine was 460. Baya pays Yaguez $60 per hour for its services. As the maintenance manager for Baya, you are trying to answer the following: The estimated cost of overhauling the first six turbines. The "steady-state" cost of manufacturing a turbine (You have to find out the asymptotic hours of making "many" turbines, as illustrated in class?

Explanation / Answer

TN=T1C

T6=(460 hours)( .562)

= 258.52 Hours

(258.52 Hours)($60/hour)

= $15511.2

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