CMA Final · Strategic Cost Management · Learning Curve
Sharma Engineering recorded 200 hours for its first batch. After producing 8 batches, the cumulative average time per batch was 102.4 hours under the cumulative average model. What learning rate does this imply?
The learning rate is 80%. Eight batches represent three doublings, so the rate cubed equals 102.4 divided by 200, which is 0.512. The cube root of 0.512 is 0.8, so the cumulative average time falls by 20% at every doubling.
- A75%
- B80%Correct
- C85%
- D90%
Explanation
8 batches means 3 doublings (1→2→4→8). So r^3 = 102.4/200 = 0.512, and r = 0.8, an 80% curve. Check: 200×0.8 = 160, ×0.8 = 128, ×0.8 = 102.4. A 90% rate would give 200×0.729 = 145.8, which does not match the data.
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