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

Thousand
s
of $6

85% slope

5
4
3

1909
1913 1914

1910

191
1912
1

1
.8
10,000

1915
1920

1918

1923

1921

100,000

1,000,000

Cumulative units produced

1909:
18,000 units
$3,300

1923:
8,000,000 units
$950

Price of Model T, 1909-1923

(in 1958 dollars)
Learning Curves

An 80% learning curve

Unit
1ST
2ND
4TH
8TH
16TH
32ND

1000
800
640
512
410

X
X
X
X
X

.80
.80
.80
.80
.80

Man hours
1000
800
640
512
410
328

Learning Curves

An 80% learning curve (cont.)

Man-hours per unit

1000
800
600

1st unit

2nd
4th
8th
16th

400

32nd

200

10

20

30

40

50

Cumulative units produced

Learning Curves

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

The log - linear method (cont.)

yx

log yx

Cum. units
(x)

Cum. units
(log x)

Learning Curves

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

Man-hours per unit

1.00

b = 90%
.10

b = 80%
b = 70%

.01

.001
1

10

100

1000

Cumulative units produced

Typical learning
curves
where k = 1 (one
hour
Curves
required Learning
for first
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

Man-hrs. / unit

Estimating learning curve

parameters (cont.)

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

Man-hrs. / unit

Manufacturing strategy and the

learning curve (cont.)

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