A Metal Works Fabricator Is About to Release a New

question 39

Essay

A metal works fabricator is about to release a new model of his firm's copper sculpture and fountain. The operations manager estimates that this product is subject to a 90 percent learning curve on labor only-the material bill is not affected by experience. The firm prices its work based on cost-the sum of materials plus 30 percent and labor plus 50 percent. (This allows the firm to practice a form of "demand management" for its very popular works.) The first item has already been finished; the material bill was $800 and labor totaled 40 hours. The firm pays its metalworking artisans an average of $18 per hour. What should be the asking price of the first unit? The second?

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Definitions:

Expert Power

Expert power arises from possessing specialized knowledge or expertise in a particular area, granting one influence over others.

Static Condition

A situation or state that does not change over time.

Individuals

Refers to single human beings as distinct from a group, collective, or community, each with their own unique characteristics, beliefs, and behaviors.

Expert Power

The influence wielded by an individual or an entity because of their expertise, skills, or knowledge.