LEARNING CURVES

Chapter Six
McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO61: Understand what a learning curve is and
where learning curves are applicable.
LO62: Plot and analyze learning curves.
LO63: Compare the impact of learning on
different industries.

6-2
Motivation: Boeing Teams Speed Up
737 Output
Boeing seeks ways to make its jets more efficient and avoid
expanding its factories and its costs.
Innovation teams are growing as Boeing seeks to increase output of
the narrow-body, workhorse plane by as much as 71 percent.
Workers here recently boosted the 737 output to 35 jets a month
from 31.5, and Boeings goal is to produce 42 planes a month in
2014.
Eventual goal is to reach 60 a month as they plan a retooled version
of the plane called the 737 Max.
Boeing today takes about 11 days for the final assembly of jets at
the Renton plant. Thats down from 22 days about a decade ago.
The companys near-term goal is to whittle that number to 9 days.
Learning curves can help Boeing and all firms reach their goals.

6-3
Application of Learning Curves
Learning curve: a line displaying the relationship
between unit production time and the cumulative
number of units produced
Wide range of applications
Can be used to estimate time and cost
One of the trade-offs in JIT

6-4
Types of Learning
1. Individual learning: improvement that results
when people repeat a process and gain skill or
efficiency from their own experience
Practice makes perfect
2. Organizational learning: also comes from
changes in administration, equipment, and product
design
Expect to see both simultaneously

6-5
Learning Curve Assumptions
1. The amount of time required to complete a given
task or unit of a product will be less each time the
task is undertaken.
2. The unit time will decrease at a decreasing rate.
3. The reduction in time will follow a predictable
pattern.

6-6
Finding the Learning Rate
1. Arithmetic tabulation
2. Logarithms
3. Some other curve-fitting method

6-7
Learning Curves Plotted as Times and
Numbers of Units

6-8
Plotting Learning Curves
In practice, learning curves are plotted using a
graph with logarithmic scales.
The unit curves become linear throughout their entire
range.
The cumulative curve becomes linear after the first
few unit.
Direct logarithmic analysis is more efficient because
it does not require a complete enumeration of
successive timeoutput combinations.

6-9
Data for an 80 Percent Learning Curve

6-10
Resulting Learning Curve Plots

6-11
Logarithmic Analysis
Yx Kx n
x Unit number
Yx Number of direct labor hours required to produce the x th unit
K Number of direct labor hours required to produce the first unit
log b
n
log 2
b Learning percentage

6-12
Example

First unit takes 100,000 hours

80 percent learning curve
Find hours for eighth unit

6-13
Improvement Curves: Table of Unit
Values

6-14
Improvement Curves: Table of
Cumulative Values

6-15
Example 6.1: The Data
Contract for 11 boats, has completed 4 of them.
Production manager has been reassigning people to
torpedo assembly.
The first boat required 225 workers, each working a 40-
hour week, while 45 fewer workers were required for the
second boat.
Manager has told them that this is just the beginning and
he will complete the last boat with only 100 workers!

6-16
Example: The Solution
180 / 225 = 0.80
Look up unit 11 for an 80 percent improvement
ratio in Exhibit 6.4 ( approximately equal to the
average of .4765 (corresponding to 10) and
.4493 (corresponding to 12)
0.4629

0.4269 x 225 = 104

6-17
Example 6.2: The Data
SUB Company has produced the first unit of a new
line of mini-subs at a cost of $500,000.
$200,000 for materials and $300,000 for labor
It has agreed to accept a 10 percent profit and is
willing to contract on the basis of a 70 percent
learning curve.
What will be the contract price for three mini-subs?

6-18
Example 6.2: The Solution

6-19
Estimating the Learning Percentage
1. Assume that the learning percentage will be the same as it
has been for previous applications within the same industry.
2. Assume that it will be the same as it has been for the same
or similar products.
3. Analyze the similarities and differences between the
proposed start-up and previous start-ups and develop a
revised learning percentage that appears to best fit the
situation.

6-20
Individual Learning
1. Proper selection of workers
2. Proper training
3. Motivation
4. Work specialization
5. Do one or very few jobs at a time
6. Use tools that support performance
7. Provide quick and easy access for help
8. Allow workers to help redesign tasks

6-21
An Example Involving Two Job
Applicants

6-22
Organizational Learning
Organizations learn as well.
A main source is individual learning.
An organization also acquires knowledge in its technology,
its structure, documents it retains, and standard operating
procedures.
Knowledge can also be embedded in the organizational
structure.
Knowledge can depreciate if individuals leave the
organization.
Knowledge can depreciate if technologies become
inaccessible or difficult to use.

6-23
Managerial Considerations
Individual learning and incentives

Workers and organization must have adequate incentives to enhance

learning.

Learning on new jobs versus old jobs

The newer the job, the greater the improvements possible.

Improvement comes from working smarter, not harder

Better methods and support systems, not increased effort, are the source of
gains.

Suggesting a learning rate leads to a built-in bias

Learning rate becomes a goal instead of an independent phenomenon.

6-24
Managerial Considerations
Preproduction versus postproduction adjustments

High levels of preproduction planning mean early units will already

incorporate a significant amount of learning.

Changes in indirect labor and supervision

Changes to production conditions can influence the learning rate.

Changes in purchasing practices, methods, and

organizational structure
Significant adjustments to any of these factors can affect production rate.

Contract phase-out

As a contract nears completion, learning curve may begin to turn upward.

6-25