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Learning Curves

1. Explain the learning curve concept
2. Identify different uses of learning curves in operations management
3. Calculate the estimated time required to do a task for a given learning curve
LEARNING CURVES AND OPERATIONS MANAGEMENT
As people gain experience in doing a task they usually can do the task more quickly. !or
example consider the time it might take someone to "ash a car for the first time. #hen imagine
ho" that person might $e a$le to "ash his car in less time as through repetitions he learns to
sequence the tasks more efficiently or perhaps as he uses $etter tools to do the tasks. #he same
learning effect occurs in many different operational settings.
#he learning curve is an analytical tool that can $e used to estimate the rate at "hich cumulative
experience allo"s "orkers to do tasks faster and "ith less cost. %perations managers use
learning curves to estimate ho" much the repetitions of a task "ill ena$le them to reduce the
amount of resources required to accomplish the ask. A learning curve is defined $y an equation
that contains the rate of improvement &i.e. reduction in costs or reduction in time taken' in
performing a task as a function of the cumulative repetitions of the task.
As early as 1(2) managers $egan developing learning curve concepts. #he commander at
*right+,atterson Air !orce -ase in .ayton %hio o$served that "orkers performing
manufacturing operations at the $ase exhi$ited a definite learning pattern. /e noted that most
aircraft manufacturing tasks experienced "hat he called an 01 percent learning rate meaning that
"orkers need 21 percent fe"er hours to make a part each time their cumulative experience
making that part dou$led. #hus if the first part took 111 minutes the second "ould require 01
minutes the fourth "ould require 23 minutes and so on. Exhi$it 1 graphs the reduction in unit
time required to complete a task as a function of the num$er of times that the task is repeated
"hen the organi4ation has an 01 percent learning rate.
1
Exhibit 1
Learning Curve !" Per#ent Learning Rate
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 20 40 60 80 100
Cumulative repetitions
T
i
m
e

p
e
r

u
n
i
t
#he learning curve is also sometimes referred to as an experience curve a progress function or
an improvement function. Essentially the learning curve is a mathematical function that can $e
used to chart the progress of "orkers as they learn to do their "ork faster. An operations
manager can express the relationship $et"een the amount of time it takes an organi4ation "ith a
learning rate percentage of r to produce the nth item as an equation5
#
n
6 #
1
&n
$
'
*here5
#
n
6 time required to complete the nth task
r 6 learning rate percentage
b 6 ln&r'7ln&2'
Exa$%&e'
Consider the information given in the aircraft manufacturing example a$ove5
#
1
6 111 minutes
#
2
6 01 minutes
#
3
6 23 minutes
*hat "ould $e the time required to produce the eighth part8
#
0
6 &111'&0
+1.322
' 6 )1.2 minutes since b6 ln&1.01'7ln&2' 6 +1.322
2
*e can verify that this is the correct ans"er $y remem$ering that the fourth unit required 23
minutes. 9ince the eighth unit represents a dou$ling of output $eyond the fourth unit "e "ould
expect its task time to $e 01 percent of the time required for the fourth unit. #hus #0 6 23&1.01'
6 )1.2. #his is the same ans"er given $y the learning curve equation a$ove.
Appendix A at the end of this supplement presents a ta$le giving task time values for selected
learning rates. #he appendix sho"s that the estimated time for the eighth unit produced on an
01: learning curve is 1.)12 times the task time required for the first unit. Again this confirms
the result "e calculated a$ove.
/o" much time "ould $e required to produce all eight parts8
;ote that the ta$le also gives the total time required to produce a cumulative num$er of units. In
our example the total time required to produce the first eight parts "ould $e ).332 < 111 6
)33.2 minutes. #he average time per part "ould $e )33.2 7 0 6 22.0 minutes.
(O) OPERATIONS MANAGERS USE LEARNING CURVES
#he learning curve helps operations managers make task time estimates $y accounting for the
fact that initial la$or requirements usually do not accurately represent future requirements.
=earning curves express the effects of improvements in task procedures over time that serve to
reduce the time needed to execute a task. >sing these curves managers can develop resource
requirement estimates that may $e used to financially ?ustify the development of a ne" product
or process. /o"ever operations managers must evaluate learning curve expectations carefully.
Expectations are $ased on the skill levels of "orkers incentives and re"ards for improvement
performance measurements and other factors. Importantly an organi4ation@s culture must
support learning in order to derive any $enefits from the learning curve.
9electing the proper learning rate value sometimes poses a pro$lem. /o" should managers go
a$out setting an expectation for learning8 #o estimate this rate for a ne" product industrial
engineers often try to identify similar existing products and gather historical data to compute
their o$served learning rates. #hey may also evaluate the complexity of the process since a
more complex process offers greater potential learning. In addition they may look for outside
effects on the pace of a process such as the technology $eing used the details of a la$or
contract etc.
In addition to estimating "hat a learning rate might $e operations managers also consider "hat
methods they might use in order to achieve a targeted learning rate. An unusually slo" learning
rate perhaps around () percent may indicate that the organi4ation@s culture inhi$its learning or
it could indicate that excellent production methods and training programs maximi4ed
productivity early on in the pro?ect. An unusually fast learning rate perhaps around A) percent
may indicate that a pro?ect $egan "ith insufficient planning and "orker training or it could
indicate that highly motivated "orkers are straining to improve.
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In general the ma?ority of learning rates range $et"een A1: to (1:. Bodney 9te"art and
Bichard *yskida &1(0A'
1
give the follo"ing guidelines for expected learning rates in different
situations5
• A): hand assem$ly72): machining C 01: learning
• )1: hand assem$ly7)1: machining C 0): learning
• 2): hand assem$ly7A): machining C (1: learning
or
• Aerospace C 0): learning
• 9hip$uilding C 01+0):
• Complex machine tools for ne" models C A)+0):
• Bepetitive electronics manufacturing C (1+():
• Bepetitive machining or punch+press operations C (1+():
• Bepetitive electronic operations C A)+0):
• Bepetitive "elding operations C (1:
• Ba" materials C (3+(2:
• ,urchased parts C 0)+00:
>sing learning curves creates several key $enefits for operations managers5
• I$%r*ve+ #a%a#it, %&anning 5 =earning curves help managers kno" ho" to manage
capacity throughout the life of a production pro?ect. Danagers typically "ant to have
more capacity at the start of a pro?ect. As "orkers $ecome more skilled and experienced
"ith the same amount of capacity they can make more. Alternatively fe"er "orkers are
needed to achieve the same level of output. #his kno"ledge can $e $uilt into a schedule
for hiring and firing personnel as "ell as a schedule for material usage requirements.
• I$%r*ve+ C*sting 5 #he learning curve also tells managers ho" costs can $e expected to
fall over time. #his reali4ation has $een used $y some companies as a competitive
"eapon. #exas Instruments for example during the 1(A1s used this kno"ledge to drive
out many of its competitors. Danagers at #exas Instruments priced products lo"er than
the initial costs to produce them "ith the expectation that the lo"er prices "ould generate
more demand "hich in turn "ould drive do"n the actual costs to the point that products
then $ecame profita$le. -y planning on their a$ility to achieve a certain learning rate
#exas Instruments "as a$le to undercut its competitors@ prices. In the same "ay
managers can use learning curve estimates to negotiate prices "ith their suppliers for
purchased items.
• Changes in Pr*+u#t 7Pr*#ess Design5 A company that understands the causes of
learning effects can design its products and processes in "ays that maximi4e the potential
for learning. 9ome companies have $een very successful at fostering learning through
product design and more importantly $y developing processes that motivate and re"ard
learning. .
1
Bodney .. 9te"art and Bichard D. *yskida. 1(0A. Cost Estimator’s Reference Manual.
;e" Eork ;E5 *iley.
3
SUMMAR-
Almost all operational tasks involve some level of learning. In this supplement "e define
learning specifically as reductions in task time that occur as a result of repetitions of the task.
9uch learning has $een sho"n to $e fairly steady and predicta$le in many operational settings.
Consequently learning curves can $e used to estimate task times and associated resource
requirements. =earning curves and learning analysis are important tools that help operations
managers to plan for capacity needs product pricing and product7process design.
SOLVED PRO.LEM
A firm must make a $id on a contract to make 12 units of a ne" product. Engineering analysis
indicates that the nature of this product and its manufacturing processes resem$le those for the
firm@s current Dodel 212 so the firm decides to $ase its $id on the 0) percent learning rate it
experienced on that model. If engineers estimate that the first unit "ill require 11 hours of la$or
ho" many hours "ill the 12 unit require8 /o" many hours "ill the firm take to make all 12
units8
S*&uti*n'
!ind the unit times for an 0) percent learning rate in Appendix A.
>nit ,roduced >nit #ime /ours per >nit Cumulative /ours Bequired
1 1.1111 11.1 hrs. 11.11 hrs.
2 1.0)11 0.)1 10.)1
3 1.AA2( A.A3 22.23
3 1.A22) A.23 33.3)
) 1.20)A 2.02 31.31
2 1.2)A1 2.)A 32.00
A 1.233A 2.33 )3.22
0 1.2131 2.13 )(.32
( 1.)(A3 ).(A 2).33
11 1.)020 ).03 A1.12
11 1.)2(( ).A1 A2.02
12 1.))03 ).)0 02.33
#his ta$le indicates that the 12
th
unit "ill require ).)0 hours and the total num$er of hours
needed to make all 12 units to 02.33 hours.
*e can also calculate the time required for the 12
th
unit directly using the learning curve
equation5
$ 6 ln&1.0)'7ln&2' 6 +1.233
#
12
6 11 &12'
+1.233
6 ).)0 hours
)
PPRO.LEMS
1. A home $uilder needs to schedule la$or for the construction of 23 homes in a su$division.
In the past the $uilder has noted a (1: learning rate. If the first home requires 2111
la$or hours to $uild estimate the time required to $uild5
a. #he 3th house
$. #he 1)th house
c. All 23 houses
2. *hat "ould the la$or estimate for all 23 homes in pro$lem 1 $e if the learning rate "ere5
a. 0):
$. 01:
c. A):
3. A ne" "orker requires 21 minutes to complete a task. If he experiences a )1: learning
rate ho" much time "ill it take him to complete the 3
th
task8
3. If a production team experiencing a A): learning rate takes 11 hours to produce the 3th
unit ho" many hours "ould it $e expected to take to produce the 12
th
unit8
). 9uppose that a consulting company typically sees an 0A: learning rate for soft"are
installations at its clients@ operating sites. If the first installation required 111 la$or
hours "hat is your estimate of the la$or required for5
a. #he 3
rd
installation
$. #he 11
th
installation
c. #he 21
th
installation
2. ;e" "orkers at company A-C typically learn at a AA: rate. If a ne" "orker requires 31
minutes to produce his first unit of output ho" many units "ill he need to produce $efore
his output rate exceeds 11 units per hour8
A. A ne" product requires )1 la$or hours for the first unit. If the production line operates at
an 02: learning rate "hat "ill $e the average la$or hours per unit required to produce 3
units8
0. ;e" technicians performing DBI procedures in a radiology department are processing
patients at rates sho"n $elo".
,atient num$er5 1 2 3 3 ) 2 A 0
,rocess time &min'5 A) 21 )2 )1 3) 33 31 3(
a. *hat is the approximate learning rate8
$. *hat is the approximate total time required to process 1) patients8
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Appendix LC-A
Learning Curve Coefficients
A