Analysis of the Effects of Fixed Costs on Learning Curve Calculations
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF LOGISTICS AND ACQUISITION MANAGEMENT
Pagination or Media Count:
The goal of this research was to analyze the effect of fixed costs on learning curve calculations. The research focused on two general research areas. The first area addressed the identification of current cost analysis practice for handling fixed costs in learning curve calculations. After identification of current practice, the unit learning curve models AXb ability to estimate total production run costs for a new production run when the slope was derived from both total cost and variable cost historical lot data was examined. Historical lot cost data was simulated for both the total cost and variable cost cases under three slopes, three fixed cost percentages, and three lot sizing profiles. The second area addressed the predictive ability, measured by mean absolute deviation MAD, of the AXb model versus the SAFFMC model FQ AXb when fit to total cost lot data. Comparisons between both models under different conditions were addressed through ANOVA. Three main findings 1 there are a variety of practices when handling fixed costs in learning curve calculations, 2 the AXb model by itself was inadequate for production run total cost estimating, and 3 the SAFFMC model was superior to the AXb model under all conditions.
- Economics and Cost Analysis