Honda Motor Company has discovered a problem in the exhaust system of one of its automobile lines and has

Honda Motor Company has discovered a problem in the exhaust system of one of its automobile lines and has voluntarily agreed to make the necessary modifications to conform to government safety requirements. Standard procedure is for the firm to pay a flat fee to dealers for each modification completed. Honda is trying to establish a fair amount of compensation to pay dealers and has decided to choose a number of randomly selected mechanics and observe their performance and learning rate. Based on the results of this test, Honda decided to pay a $60 fee for each repair (3 hours × $20 per flat-rate hour).

Southwest Honda, Inc., is considering whether to participate in the program. If they can average three hours or less on each repair (what Honda is willing to pay them for), it will make sense for them to agree. They performed their own test repairs to help in their decision process. Six mechanics, working independently, have completed two modifications each. On average, the mechanics took 9 hours to do the first unit and 6.3 hours to do the second. The dealership expects to perform 300 such modifications, which works out to 50 modifications per mechanic, including the first two units already built. Use Exhibit 6.5.

On average, how many hours will it take Southwest Honda to perform each modification using all six mechanics as planned?

Expert Answer

We will approach this method using Learning Curve method.

As per this method, if learning rate = L % ,

Then ,

If the time taken for the first unit = T

Time taken for the second unit = L/100. T

Time Taken for the 4th unit = ( L/100)^2 .T

Time taken for the 8th Unit = ( L/100)^3.T etc etc

As mentioned,

Time taken for the first unit = 9 hours

Time taken for the second unit = 6.3 hours

Therefore Learning rate

= ( Time taken for 2nd unit/Time taken for the 1st unit) x 100

= ( 6.3/9) x 100

= 70%

Total modifications done by 6 mechanics = 300

Therefore, number of modifications per mechanic = 300/ 6 = 50 modifications

We would therefore need to find out total amount of time taken by each mechanic to complete 50 modifications which we will do so using LEARNING CURVE TABLE.

We obtain following result using LEARNING CURVE TABLE :

Time taken to complete 50th modification = 1.2 hour

Total cumulative time taken to complete 50 modifications = 110.76 hours

Therefore , on average amount of time it will take to perform each modification

= Total time taken to complete 50 modifications / 50

= 110.76/50

= 2.215 hours

ON AVERAGE IT WILL TAKE 2.215 HOURS TO PERFORM EACH MODIFICATION
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