Learning Curves

Dr. Everette S. Gardner, Jr.

Learning curve concepts
Predicts reduction in manufacturing costs or
direct labor hours as cumulative production
increases

Based on empirical evidence rather than

theory

Learning Curves 2
Thousand
s
of $6 85% slope
5
4
1909
3
1910 1913 1914
1915
2 191
1912
1 1920
1923
1918
1 1921
.8
10,000 100,000 1,000,000

Cumulative units produced

1909: 1923:
18,000 units 8,000,000 units
$3,300 $950

Price of Model T, 1909-1923

(in 1958 dollars)
Learning Curves 3
An 80% learning curve
Unit Man hours
1ST 1000
2ND 1000 X .80 800
4TH 800 X .80 640
8TH 640 X .80 512
16TH 512 X .80 410
32ND 410 X .80 328

Learning Curves 4
 An 80% learning curve (cont.)
1st unit
1000
Man-hours per unit

800 2nd

4th
600
8th
16th
400 32nd

200

0
10 20 30 40 50
Cumulative units produced
Learning Curves 5
 The log - linear method
Exponential form:
yx = kxn

Where
x = unit number
yx = man-hrs. to produce xth unit
k = hrs. to produce first unit
n = log b / log 2
b = learning rate (80%, etc.) expressed as decimal (.8,
etc.)

Logarithmic equation:
log yx = log k n (log x)

Learning Curves Learn.xls 6

The log - linear method (cont.)

yx log yx

Cum. units Cum. units

(x) (log x)

Learning Curves 7
 Example calculations
yx = kxn, n = log b / log 2

For 80% LC, b = .80

n = log .80 / log 2 = -.3219

Assume k = 1000

y1 = 1000 (1)-.3219 = 1000 (1) = 1000

y2 = 1000 (2)-.3219 = 1000 (.80) = 800
y3 = 1000 (3)-.3219 = 1000 (.7021) = 702
y4 = 1000 (4)-.3219 = 1000 (.6400) = 640
y100 = 1000 (100)-.3219 = 1000 (.2270) = 227

Learning Curves 8
 1.00

Man-hours per unit

b = 90%
.10
b = 80%

.01 b = 70%

.001
1 10 100 1000
Cumulative units produced

Typical learning
curves
where k = 1 (one
hour
required Learning Curves
for first 9
unit)
Forces behind the learning curve
1. Increased labor efficiency

2. Process innovations and methods improvements

3. Substitution effects

4. Product redesign

5. Standardization

6. Economies of scale

7. Shared experience

Learning Curves 10
 Estimating learning curve
parameters
The concept applies to an aggregation rather than to
individual operations

First unit hours rarely known in time to develop curve must

estimate far in advance

Slope can be estimated by least-squares regression

Comparisons should always be made to similar

products/processes industry data usually available

Extensive pre-production planning should result in lower,

flatter curve
Learning Curves 11
Estimating learning curve
parameters (cont.)

Man-hrs. / unit

Little planning

Extensive planning

Cumulative units

Learning Curves 12
 Manufacturing strategy and the
learning curve
Capacity expands automatically

Break-even points reduced automatically

Worker compensation plans should account for learning

effects

The learning curve is a strategic, not a tactical concept

cannot be used as a short-range operating control

A learning curve strategy can reduce the ability to innovate

At some point, the learning curve will plateau

Learning Curves 13
Manufacturing strategy and the
learning curve (cont.)
Man-hrs. / unit

b<
1.0
b = 1.0

Cumulative units

Learning Curves 14
 Learning curve applications
Production planning / EOQ planning

Price forecasting
Petrochemicals
Consumer durable goods

Competitive bidding

Income reporting in accounting

Planning warranty maintenance

Washers / dryers
Televisions

Forecasting industrial accidents

Petroleum industry
Mining

Forecasting automobile accidents on new roadways

Learning Curves 15