Lecture Operations and supply chain management: The Core (3/e) – Chapter 4a: Learning curves

Learning Curves
Chapter 4a
McGraw­Hill/Irwin

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Learning Curves




A learning curve is a line that displays the
relationship between unit production and
cumulative number of units produced
One way of learning is “learning by doing”




As plants produce more, they gain experience in the
best production methods, which reduces their costs in
a predictable manner
This is observed as a decline in production costs (by a
specific percentage) each time cumulative production
doubles


Learning rates are unique and depend upon the nature of
the process
4a­2

Learning Curves

Graphed on a
logarithmic scale, the
learning curve is a
straight line

4a­3


Learning Curve Assumptions

4a­4


Learning Curves




Learning curves can be developed from an
arithmetic tabulation, by logarithms, or some
other curve-fitting technique
The improved performance can be thought of
in two ways




Time per unit – shows the decrease in time
required for each successive unit
Output per time period – increase in number of
units produced over a fixed time period
4a­5


Learning Curves
A 90% learning curve
implies that each
time cumulative
production doubles
the cost per unit is
reduced by 10%

Differences in learning
curves can have
dramatic effects over
time!

4a­6


Learning Curves


A logarithmic plot allows linear extrapolation
and more accurate interpretation

Excel: Learning Curve Ca

4a­7


Learning Curves – Logarithmic
Analysis


The relationship between total number of units
produced and learning can be expressed
mathematically

Excel: Learning Curves
4a­8


Learning Curves – Logarithmic
Analysis


Example


For an 80% learning curve, if the first unit
required 100,000 hours, how many hours will the
eight unit require?

4a­9

Learning Curve Tables


When the learning percentage is known,
tables can be used to estimate labor hours for
a specific unit


Multiply the initial unit labor hours by the
appropriate value from the table

Example: With an
80% learning rate, the
eighth unit should
take 0.512 times the
initial unit time. If Y 1 =
100,000, Y 8 =
100,000(0.512) =
51,200

4a­10


Learning Curve Example

From table 4A.5, with an 80%
improvement ratio unit 11 should
take between 0.4765 and 0.4493
times the original time. Interpolate to

obtain a factor of 0.4629.
Overick has been slightly
overoptimistic
4a­11


Learning Curve Example

Excel: Learning Cur

4a­12


Managerial Considerations

4a­13


Managerial Considerations

4a­14