Hereford Company Is Planning to Introduce a New Product with an 80

question 31

Multiple Choice

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

• A)20 hours
• B)80 hours
• C)100 hours
• D)160 hours

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Definitions:

Operations Management

The domain of management tasked with the development and management of production processes and revamping operational methods in the manufacturing of goods or services.

Shewhart

Walter A. Shewhart, an American engineer and statistician recognized as the father of statistical quality control.

Scientific Management Era

describes a period in the early 20th century focusing on improving economic efficiency, especially labor productivity, through systematic scientific studies of work methods.

Operations Management

The administration of business practices to create the highest level of efficiency within an organization.