Task 2
B2a Decision analysis tool explanation
Using the learning curve to determine production rates, Shuzworld will be able to adjust their production, and cost to help stay competitive in the industry. The learning curve will helps the company to predict the needed cost per unit, so the business can determine the profit it needs to stay competitive. The learning is based on the theory that the employees will get better at their tasks doing the job more frequently. The theory also supports the time needed to produce the tasks will decrease as production continues. Using the learning curve, Shuzworld can determine how much to charge for its products and know the how much profit to expect for selling at the determine price. It also allow the company the option to develop a large learning curve in the industry, so Shuzworld can create an aggressive pricing policy that focus on cost reductions, build on shared experience, as well as the ability to keep more inventory for the demand in orders to save on labor costs. The coefficient approach is the best method for the company to use. The coefficient approach allows Shuzworld to determine the overall labor hours needed to produce the sandals, and determine the hours of production cost by multiplying the labor hours by the cost of labor, and divide that number by the amount of units made. The coefficient approach calculates the require units number, by multiplying the labor hours required for manufacturing the first units by the learning curve coefficients for the required units.
There are other ways to determine the learning curve too. The company could use the arithmetic approach to calculate the learning curve. This approach requires the company to multiply the hours required per unit by the learning curve rate each time production doubles. This approach appears to be an easier way to determine production time; it makes it difficult to know what production time for specific units, which may decrease in the areas when
Using the learning curve to determine production rates, Shuzworld will be able to adjust their production, and cost to help stay competitive in the industry. The learning curve will helps the company to predict the needed cost per unit, so the business can determine the profit it needs to stay competitive. The learning is based on the theory that the employees will get better at their tasks doing the job more frequently. The theory also supports the time needed to produce the tasks will decrease as production continues. Using the learning curve, Shuzworld can determine how much to charge for its products and know the how much profit to expect for selling at the determine price. It also allow the company the option to develop a large learning curve in the industry, so Shuzworld can create an aggressive pricing policy that focus on cost reductions, build on shared experience, as well as the ability to keep more inventory for the demand in orders to save on labor costs. The coefficient approach is the best method for the company to use. The coefficient approach allows Shuzworld to determine the overall labor hours needed to produce the sandals, and determine the hours of production cost by multiplying the labor hours by the cost of labor, and divide that number by the amount of units made. The coefficient approach calculates the require units number, by multiplying the labor hours required for manufacturing the first units by the learning curve coefficients for the required units.
There are other ways to determine the learning curve too. The company could use the arithmetic approach to calculate the learning curve. This approach requires the company to multiply the hours required per unit by the learning curve rate each time production doubles. This approach appears to be an easier way to determine production time; it makes it difficult to know what production time for specific units, which may decrease in the areas when