Managerial Problem & Statistical Analysis THROUGH T

THE SOLUTION OF A MANAGERIAL PROBLEM

THROUGH THE APPLICATION OF STATISTICAL ANALYSIS

This research examines a problem that is amenable to solution through the application of statistical analysis. Through the application of statistical analysis to this problem, a variety of statistical concepts and procedures are illustrated.procedure employed in the example of hypothesis testing.

The Managerial Problem to Be Solved

Managers of aircraft manufacturing organizations (producing a product with a production life extending to an indefinite time into the future) must be able to answer the question: What will be the probable level of production costs per unit at specified future time points? As such costs cannot be determined with certainty in advance, an accurate and reliable procedure for their estimation must be derived.

The production time for the completion of an aircraft, such as a jet airliner, typically ranges from 18to24 months. Orders for such aircraft, however, are often placed by customers as much as five years prior to the expected delivery date. Thus, the aircraft manufacturing manager must be able to project the production cost of an aircraft with a high degree of accuracy some years in advance.

A wide variety of components and systems are combined to produce an aircraft. One of the major components, and typically the most costly component is the airframe, or aircraft body. The cost of labor involved in airframe production is one

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gnificant, in most cases, in the reduction of costs related to the learning curve concept. Figure 1 Learning Curves: 70 Percent and 80 Percent (line graph) ((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((( 130 ( 120 ( 100 ( $ 80 Cost ( <((( 80% per 60 Unit ( 40 70% (((> ( 20 ( 0 ((((((((((((((((((((((((((((((((((((((((((((((((( 1 2 4 8 16 Number of Units Produced ((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((( While the slope of the learning curve is similar for all production operations, there are significant variations as to the starting points for different processes.8 Thus, while a 20 percent reduction in costs for each doubling of production is applicable to the production of airframes, a 30 percent reduction, a 10 percent reduction, or some other factor may be applicable to a different production process.9 Therefore, while __________ 8W. B. Hirschmann, "Profit from the Learning Curve," Harvard Business

Category: Business - M