Will has just started a small company making special cakes for retirement parties. He just received a large order of five cakes from a local business. Will expects substantial productivity improvements in his work as he moves from the first cake in this order to the fifth cake. His current cost of making a cake is c(1) = 40 and he expects a learning rate of LR = 0.85. What will be his cost for all five cakes combined?

The solution for the cost for all five cakes combined is done below:

Explanation:

We start by looking up the cumulative learning curve coefficient in Table 6.4 for an output of 5 and a learning rate of LR = 0.85. We get:

CLCC(5,0.85) = 4.031086

We then compute the costs of making 5 units as:

CC(of making 5 units, LR = 0.85, c(1) = 40) = 40 × CLCC(5,0.85) = 40 × 4.031086 = 161.2434.

The cost for all five cakes is $161.24

Explanation:

aX^b

a= cost

X = number of cakes

b = log( rate) / log 2 = -0.2344652536

lets take the fifth cake 40+(5)^-0.234465236 = 27.43

27.43

28.9

30.91

34

40

161.24  

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