A new product made from recycled bio-plastics needs 17 labor hours to complete the build for the first unit.

If production operates at an 87% learning curve rate, calculate the average labor hours required per unit to produce five units.

12.3 hours

Explanation:

The formula that is used to calculate the average time to produce a unit:

y = aQ^b

y = Average time to produce one unit.

a = Time necessary to produce the first unit.

Q = Cumulative production in units.

b = Learning rate which is calculated using: log (percentage learning rate) / log 2.

In this case, we have to start by calculating b:

b = Log0,87/log2 = - 0.139/0.693 = - 0.200

Then, we have that a = 17 and Q=5 and replace this on the formula for the average time to produce one unit:

y = 17 * 5^-0.200

y = 17*0,724 = 12,3

According to this, the average labor hours required per unit to produce five units is 12.3 hours.