LEARNING CURVE

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´ .Learning curve ³The term learning curve refers to a graphical representation of the changing rate of learning for a given activity or tool.

INTRODUCTION  Also called improvement curve or progress curve  Graphical representation  rate of improvement  rate of change in average cost  Employed in setting incentive rate schemes  Relation between cumulative output and average unit cost .

.EXAMPLE An 80 percent learning curve means the per unit average cumulative cost (in hours or dollars) falls to 80 percent of the previous per unit average cumulative cost as the cumulative output doubles.

Theodore Paul Wright effect of learning on labour productivity in the aircraft industry mathematical model of the learning curve . psychologist discussed the properties of different types of learning curves  1936 .History  1885.Hermann Ebbinghaus.Arthur Bills. the 1st person time required to memorize a nonsense syllable increased sharply as the number of syllables increased  1934.

$100million  2nd copy of new airplane .$80million  4th copy of new airplane .$64million  8th copy of new airplane -$51 million .AIRCRAFT INDUSTRY  1st copy of new airplane .

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. Flat or gradual learning curve.Types of learning curve Steep learning curve.

Eg:. Harder to climb.Chess . Rules are simple and quickly learn Difficult skill to learn.Steep learning curve:Large gain of knowledge in the early stage.

 Flat or gradual learning curve:- Rate of knowledge is slowly spaced. . Gives ample time to imprint the procedure or skills.

LEARNING CURVE FORMULATION Learning curve models Direct labour hour Margin cost .

a = the first unit cost. . which defines the slope of the learning curve. b = the learning elasticity.Margin cost model Formula :Ycx = ax-b where. Ycx = average cost of the first x units. x = the cumulative unit number output.

= the progress ratio. K = the number of direct labor hours required to produce the first unit. = the learning rate. . X = the cumulative unit number. n = log /log 2.Direct labour hour model Formula: Y = KXn where. and 1 . Y = the number of direct labor hours required to produce the Xth unit.

Learning curve Positive Curves Negative Curves Learn slowly at first and then faster later on. Learn quickly at first and then our progress slows. Learning is accelerating. Learning is slowly. . Eg: student learning calculus. Eg: a child learning to tie her shoes.

MANAGERIAL USES  Pricing  Production  Financial planning  Modernise or replace decisions .

Incentives for aggressive pricing in early phases of a product life cycle.OTHER USES ‡ ‡ ‡ ‡ ‡ ‡ ‡ Capacity analysis and resource planning. pricing and staff planning. Estimation of production-line performance. Direct labour cost. Cost-reduction proposals pricing. Cost estimation. Break even estimation. .

new product development. ship building. the less time will be required on each iteration´.aircraft manufacturing. . Eg:.etc.LEARNING CURVE EFFECT ³The learning effect states that the more often a task is performed. bridge construstion.

specialisation and methods of improvement  Technology driven learning  Changes in resource mix  Product redesign  Value chain effects  Shared experience effect .REASONS FOR THE EFFECT OF LEARNING CURVE  Labour efficiency  Standardisation.

LEARNING CURVE .zigzag .

LIMITATIONS        Depends on many assumptions Best results only in static system Difficulty in application Zigzag curve Old technique Money and time constraints Not accurate .

.Case-study  Douglas Aircraft.

b) The degree to which the capacity is exploited.Factors that affecting learning curves:a) The inherent capacity of an operation to improve. .

Conclusion .

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