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Learning Curve Outline
Learning Curve Outline
SUPPLEMENT D
Supplement
log r
log 2
r = learning rate
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SUPPLEMENT D
2. Assumptions
a. The direct labor required to produce the n+1st unit will always be less than the
direct labor required for the nth unit.
b. Direct labor requirements will decrease at a declining rate as cumulative production
increases.
c. The reduction in time will follow an exponential distribution.
Use Application D.1: Estimating Direct Labor Requirements (AP D.1) for an
exercise using the learning model.
D. Using Learning Curves
1. Bid preparation
q Use learning curves to estimate labor cost.
q Add material costs and profit to obtain bid amount.
2. Financial planning
q Use learning curves to estimate cash needed to finance operations.
3. Labor requirement estimation
q Estimate training requirements.
q Develop hiring plans.
Use Application D.2: Estimating Cumulative Labor Hours (AP D.2) for an example of
using the learning model to test budget constraints.
E. Managerial Considerations in the Use of Learning Curves
1. It may be difficult to obtain a good estimate of the learning rate for an organization.
2. The simpler the product, the less the learning rate.
3. The entire learning curve is based on the time required for the first unit, which may
itself be the result of an estimation process.
4. Learning curves are used to greatest advantage in the early stages of new product or
service production.
5. Implementing team approaches change organizational learning rates.
6. Learning curves are only approximations.
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