Your firm has expertise with a special type of hand-finished furniture. The learning rate is known to be 82%. If the first piece of furniture took 6 hours, estimate how long it will take to complete the third unit.

Using the arithmetic approach, the second unit will take 0.82 ∗ 6 = 4.92 hours and the fourth unit will take 0.82 ∗ 0.82 ∗ 6 = 4.03 hours. The third unit must take an amount of labour between these two values, but not exactly halfway. There is more absolute improvement from unit 2 to unit 3 than from unit 3 to unit 4. A reasonable estimate would be about 4.4 or 4.5 hours (the answer from Excel OM is 4.38 hours).