GMS 401 - TEST 2 STUDY GUIDE WITH COMPLETE SOLUTIONS

GMS 401 - TEST 2 STUDY GUIDE WITH COMPLETE SOLUTIONS Learning Curves - Answer️️ -The premise that people and organizations get better at their tasks as the tasks are repeated; sometimes called experience curves. Major Roles in Learning Curves - Answer️️ -employment levels, costs, capacity, and pricing. Doubling of Production - Answer️️ -when production doubles, the decrease in time per unit affects the rate of the learning curve. T x L^n= time required for the nth unit The Rate of Learning - Answer️️ -depends on the the quality management and the potential of the process and product. What Disrupts the Learning Curve - Answer️️ -Any change in process, product, or personnel disrupts the learning curve. The steeper the slope of learning curve - Answer️️ -the faster the drop in costs ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM TORONTO METROPOLITAN UNIVERSITY 2 (75% learning rate is better than 85%) products that decline more steeply than others - Answer️️ -Stable, standardized products and processes Learning Curves are useful for - Answer️️ -1. Internal: Labour forecasting, scheduling, establishing costs and budgets 2. External: Supply Chain Negotiations 3. Strategic: Evaluation of a Company and industry performance, including costs and pricing. If Learning Curves are Ignored - Answer️️ -Problems such as Scheduling Mismatches - Leading to idle labour and productive efficiencies Refusal to accept new orders because capacity is assumed to be full Missing and opportunity to negotiate with suppliers for lower purchase prices as a result of large orders. ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM TORONTO METROPOLITAN UNIVERSITY 3 Three Ways to Approach the Mathematics of Learning Curves - Answer️️ -1. Arithmetic Analysis 2. Logarithmic Analysis 3. Learning Curve Coefficients Arithmetic Approach - Answer️️ -uses the production doubling equation T x L^n = time required for nth unit Logarithmic Approach - Answer️️ -Allows us to determine the labour for any unit Tn = T1(N^b) where: Tn = time for the nth unit T1 = hours to produce the first unit b = (log of the learning rate/log 2) = slope of the learning rate Learning Curve Coefficient Approach - Answer️️ -Tn= T1 x C ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM TORONTO METROPOLITAN UNIVERSITY 4 Tn = time for the nth unit T1 = hours to produce the first unit C = learning curve coefficient found in "unit time coefficient" A firm can persue a learning cost steeper than industry average by: - Answer️️ -1. Following an aggressive pricing policy 2. Focusing on continuing cost reduction and productivity improvement 3. Building on a shared experience 4. Keeping capacity growing ahead of demand Two ways that quality improves profitability are - Answer️️ -Sales gain via improved response, price flexibility, increas