THE "TRADE-OFF" BETWEEN LEARNING AND INFLATION IN SHIPBUILDING

Learning leads to a decrease in program cost and inflation leads to an increase in program cost. At a certain time, the benefits of learning and the penalty due to inflation will balance each other. This time is defined as the "critical time." The "critical time" depends upon the number of ships to be built because this determines the possible gain in learning. The "Critical time" also depends upon the assumed inflation, upon the achievable learning rate, and upon the material/labor ratio of the first ship. Learning expectation can be influenced by planning and the material/labor ration by a make- or buy-decision. Assumptions on future learning are as vague as assumptions on inflation. The paper shows that it is almost impossible to beat inflation. It shows that accelerated programs are preferable and that make-decisions supersede the value of buy-decisions. The result is derived from an abstract treatment of the subject.

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    American Society of Naval Engineers

    Suite 507, 1012 14th Street, NW
    Washington, DC  USA  20005
  • Publication Date: 1978-8

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  • Accession Number: 00180230
  • Record Type: Publication
  • Source Agency: American Society of Naval Engineers
  • Files: TRIS
  • Created Date: Sep 27 1978 12:00AM