"Without application, the benefits of knowledge cannot be fully achieved." - Roger J. Best
6.1 Cost Advantage (Figure 6-6 and Appendix 6.2)
Estimate the experience curve coefficient for a cost curve with an initial unit cost of $100, an initial cumulative volume of 50,000 units, a current unit cost of $70, and a cumulative volume of 300,000 units.
What is the estimated unit cost when the business hits a cumulative volume of 1 million units?
What cost advantage will the business have at a cumulative volume of 1 million units if we assume that the business's closest competitor is on the same experience curve with a cumulative volume of 500,000 units?