A Metal Works Fabricator Is About to Release a New

question 82

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% learning rate on labour only-the material bill is not affected by experience. The firm prices its work based on cost-the sum of materials plus 30% and labour plus 50%. (This allows the firm to practice a little "demand management" for its very popular works.) The first item has already been finished; the material bill was $800 and labour totalled 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:

Business Practices

Customary, habitual ways of operation that are considered standard within a particular business or industry.

Hypocrisy

The behavior of individuals or groups who claim to have moral standards or beliefs to which their actions do not conform.

Primary Research

New research activity undertaken to prepare a communications plan or activity (e.g., a survey, focus group, or other form of research).

Secondary Research

The process of using existing research data or findings from previous studies for a new analysis or insight.