Assignment Chapter 3

Q1. You have been asked to estimate the cost of 100 prefabricated structures to be sold to a local
school district. Each structure provides 1,000 square feet of floor space, with 8-feet ceilings. In 2003,
you produced 70 similar structures consisting of the same materials and having the same ceiling
height, but each provided only 800 square feet of floor space. The material cost for each structure
was $25,000 in 2003, and the cost capacity factor is 0.65. The cost index values for 2003 and 2014
are 200 and 289, respectively. The estimated manufacturing cost for the first 1,000-square-foot
structure is $12,000. Assume a learning curve of 88% and use the cost of the 50th structure as your
standard time for estimating manufacturing cost.

Estimate the total material cost and the total manufacturing cost for the 100 prefabricated
structures.

Q2. The Civil Engineering Technology Department of Universiti Tun Hussein Onn Malaysia Campus
Pagoh Branch has a student team that design a pontoon boat model for the Malaysian Technical
University Network (MTUN) competition. The time required for the team to assemble the first train
model is 5.5 hours. Their improvement (learning rate/curve) is 82% which means that as output is
doubled, their time to assemble a train model reduced by 20%.

a) Evaluate the time it will take the team to assemble the 5th (FIFTH) and 10th (TENTH)
pontoon boat model.

b) Compute the total time required to assemble the first 5 and 10 pontoon boat models.
Solution Q1:

Given: 2003 2014

Production quantity 70 100
Floor space (ft2) 800 1000
Ceiling height (ft) 8 8
Material cost per unit $25,000 ?
I 200 289

Given;
X = 0.65
Learning curve = 88% = s = 0.88

Using Indexes technique;

𝐼𝑛
𝐶𝑛 = 𝐶𝑘 ( )
𝐼𝑘
𝐼2014
𝐶800𝑓𝑡 2 (2014) = 𝐶800𝑓𝑡 2 (2003) ( )
𝐼2003
289
= $25,000 ( ) = $36,125⁄𝑢𝑛𝑖𝑡
200

Using the power sizing techniques;

𝑆𝐴 𝑋
𝐶𝐴 = 𝐶𝐵 ( )
𝑆𝐵
𝑆𝐴 𝑋
𝐶1000 = 𝐶800 ( )
𝑆𝐵
1000 0.65 $41,763.74
= $36,125 ( ) = ⁄𝑢𝑛𝑖𝑡
800

Total material cost = $41,763.74⁄𝑢𝑛𝑖𝑡 × 100𝑢𝑛𝑖𝑡 = $𝟒, 𝟏𝟕𝟔, 𝟑𝟕𝟔. 𝟎𝟎

Given;
Cost manufacture for first 1000ft2 = $12,000

Cost to produce unit 50th;

log 𝑠
𝑍𝑢 = 𝐾(𝑢𝑛 ) 𝑛=
log 2
𝑙𝑜𝑔 0.88
𝑍50 = 12,000 (50 log 2 )

= $5832.43⁄𝑢𝑛𝑖𝑡
Total manufacturing cost = $5832.43⁄𝑢𝑛𝑖𝑡 × 100𝑢𝑛𝑖𝑡 = $𝟓𝟖𝟑, 𝟐𝟒𝟑. 𝟎𝟎
Solution Q2:

a)
𝑍𝑢 = 𝐾(𝑢𝑛 )

K = 5.5 hours
S = 0.82
n = (log 0.82)/(log 2) = -0.286

𝑍5 = 5.5 (5)−0.286 = 3.5 ℎ𝑜𝑢𝑟𝑠

𝑍10 = 5.5 (10)−0.286 = 2.8 ℎ𝑜𝑢𝑟𝑠

b)

𝑥 𝑥 𝑛
𝑛)
𝑇𝑥 = ∑ 𝑍𝑢 = ∑ 𝐾(𝑢 = 𝐾 ∑ 𝑢𝑛
𝑢=1 𝑢=1 𝑢=1

5 5

𝑇5 = 5.5 ∑ 𝑢−0.286 = 5.5 ∑[1−0.286 + 2−0.286 + ⋯ + 5−0.286 ] = 𝟐𝟏. 𝟐 𝒉𝒐𝒖𝒓𝒔

𝑢=1 𝑢=1

10 10
−0.286
𝑇10 = 5.5 ∑ 𝑢 = 5.5 ∑[1−0.286 + 2−0.286 + ⋯ + 10−0.286 ] = 𝟑𝟔. 𝟓 𝒉𝒐𝒖𝒓𝒔
𝑢=1 𝑢=1