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 2
Thousands
of $
6 85% slope
5
4
1909
3
1910 1913 1914
1915
2 1911
1912 1920
1923
1918
1 1921
.8
10,000 100,000 1,000,000

Cumulative units produced

1909: 1923:
18,000 units 8,000,000 units
$3,300 $950

Price of Model T, 1909-1923

(in 1958 dollars)
Learning Curves 3
An 80% learning curve
Unit Man hours
1ST 1000
2ND 1000 X .80 800
4TH 800 X .80 640
8TH 640 X .80 512
16TH 512 X .80 410
32ND 410 X .80 328

Learning Curves 4
 An 80% learning curve (cont.)
1st unit
1000

2nd
Man-hours per unit

800

4th
600
8th
16th
400 32nd

200

0 10 20 30 40 50
Cumulative units produced
Learning Curves 5
 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 6
The log - linear method (cont.)

yx log yx

Cum. units Cum. units

(x) (log x)

Learning Curves 7
 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 8
 1.00

Man-hours per unit

b = 90%
.10
b = 80%

.01 b = 70%

.001
1 10 100 1000

Cumulative units produced

Typical learning curves

where k = 1 (one hour
required for first unit)

Learning Curves 9
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
Estimating learning curve
parameters (cont.)

Little planning
Man-hrs. / unit

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
Manufacturing strategy and the
learning curve (cont.)
Man-hrs. / unit

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