A Contractor Builds Large Ships for the Department of Defense

question 101

Essay

A contractor builds large ships for the Department of Defense.A recent contract called for 12 amphibious landing platforms.It was originally estimated that the first of these would cost $1 billion and that 80 percent learning would be appropriate.In fact,the first ship cost $1.6 billion and the second $1.12 billion.What is the revised learning curve? What will be the total cost of the twelve ships? Is it higher or lower than the original estimate? If the defense department cuts the contract from 12 ships to 9,what happens to the average cost per ship?

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Definitions:

Fluid Ounces

A unit of volume used primarily in the United States to measure liquids.

Cup

A small, open container used for drinking, typically with a handle and made of a hard material.

Metric Equivalent

A system of measurement that provides conversions between the metric system units and other measurement units.

Liters

A metric unit of volume equal to 1,000 cubic centimeters or approximately 0.26 U.S. gallons.