Learning and Production Rate in Cost Estimating
Abstract
Production rate is a very important factor in estimating manufacturing costs. Actual price data shows that production rate has a much greater affect on cost than learning. Cost analysis frequently use learning as the only variable in creating cost estimating relationships from historical data bases for manufacturing costs. Predicting future costs due to changes in annual and cumulative production quantities should use both learning and production rate to prevent erroneous cost estimates. Large errors in predicting cost and quantities can result due to ignoring rate. High production rate lowers unit cost, and vice versa low production rate increases unit production cost. Lower production rate is a frequent reaction to cutting current costs, but this usually results in a higher unit production cost due to the government and contractor's fixed costs or business base. Production rate is shown to have a much greater impact than learning in manufacturing cost estimating relationships and unit production costs.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1993
- Accession Number
- ADA275873
Entities
People
- Alan G. Markell
Organizations
- United States Army Aviation and Missile Command