Supplement 7

Learning Curves

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Supplement 7: Learning Objectives
You should be able to:
LO 7s.1 Explain the concept of a learning curve
LO 7s.2 Make time estimates based on learning curves
LO 7s.3 List and briefly describe some of the main
applications of learning curves
LO 7s.4 Outline some of the cautions and criticisms of
learning curves
LO 7s.5 Estimate learning rates from data on job times

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 Learning Curves
Learning curve
 The time required to perform a task decreases with
increasing repetitions
The degree of improvement is a function of the task
being done
 Short, routine tasks will show modest improvement
relatively quickly
 Longer, more complex tasks will show improvement over a
longer interval

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 The Learning Effect
 The learning effect is attributed to a variety of factors:
 Worker learning
 Preproduction factors
 Tooling and equipment selection
 Product design
 Methods analysis
 Effort expended prior to the start of work
 Changes made after production has begun
 Changes in work methods
 Changes in tooling and equipment
 Managerial factors
 Improvements in planning, scheduling, motivation, and control

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 Learning

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 Interesting Characteristics of Learning
The learning effect is predictable
 The learning percentage is constant
Every doubling of repetitions results in a constant
percentage decrease in the time per repetition
 Typical decreases range from 10 to 30 percent

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 Learning Curves: On a Log-Log Graph

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 Learning Illustrated
 Each time cumulative output doubles, the time per unit for that
amount should be approximately equal to the previous time multiplied
by the learning percentage.
 If the first unit of a process took 100 hours and the learning rate is 90%:

Unit Unit Time (hours)

1 = 100
2 .90(100) = 90
4 .90(90) = 81
8 .90(81) = 72.9
16 .90(72.9) = 65.61
32 .90(65.61) = 59.049

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 Unit Times: Formula Approach

Tn  T1  n b

where
Tn  Time for nth unit
T1  Time for first unit
ln r
b
ln 2
r  learning rate percentage
ln stands for the natural logarithm
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 Example: Formula Approach
If the learning rate is 90, and the first unit took 100
hours to complete, how long would it take to complete
the 25th unit?

ln.90
T25  100  25 ln 2

 100  25.15200
 61.3068 hours

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 Unit Times: Learning Factor Approach
The learning factor approach uses a table that shows
two things for selected learning percentages:
 Unit value for the number of repetitions (unit number)

Tn  T1  Unit time factor

 Cumulative value, which enables us to compute the total

time required to complete a given number of units
T n  T1  Total time factor

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 Example: Learning Factor Approach
If the learning rate is 90, and the first unit took 100
hours to complete, how long would it take to complete
the 25th unit?
T25  100  .613
 61.3 hours
How long would it take to complete the first 25 units?

T 25  100  17.713
 1,771.3 hours

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 Learning Curve Applications
Useful application areas:
1. Manpower planning and scheduling
2. Negotiated purchasing
3. Pricing new products
4. Budgeting, purchasing, and inventory planning
5. Capacity planning

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 Cautions and Criticisms
1. Learning rates may differ from organization to
organization and by type of work
 Base learning rates on empirical studies rather than assumptions
where possible
2. Projections based on learning curves should be regarded
as approximations of actual times
3. Because time estimates are based on the first unit, care
should be taken to ensure that the time is valid
4. It is possible that at some point the curve might level off
or even tip upward

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 Cautions and Criticisms (cont.)
5. Some of the improvements may be more apparent than
real: improvements in times may be caused by increases
in indirect labor costs
6. In mass production situations, learning curves may be of
initial use in predicting how long it will take before the
process stabilizes
 The concept does not usually apply because improvement in time
per unit is almost imperceptible

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 Cautions and Criticisms (cont.)
7. Users of learning curves fail to include carryover effects
from previous experiences
8. Shorter product life cycles, flexible manufacturing, and
cross-functional workers can affect the ways in which
learning curves may be applied

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 Estimating Learning Rates
A manager wants to determine an appropriate learning rate for a new
type of work his firm will undertake. He has obtained completion times
for the initial six repetitions of a job of this type. What learning rate is
appropriate?
Completion According to theory, the time per unit decreases at a
Unit Time (hours) constant rate each time the output doubles (e.g., 1 to
2, 2 to 4, and 3 to 6). The ratios of these observed
1 15.9
times will give us an approximate rate.
2 12.0
Unit 2 12.0 Unit 4 9.1 Unit 6 7.5
3 10.1   .755   .758   .743
Unit 1 15.9 Unit 2 12.0 Unit 3 10.1
4 9.1 Not surprisingly, there is some variability; the rate is
5 8.4 usually a smoothed approximation. Even so, the
ratios are fairly close– a rate of 75 percent in this
6 7.5
case.

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Operations Strategy
Learning curves have strategic implications for:
 Market entry when trying to rapidly gain market share
As volume increases, operations is able to move quickly down
the learning curve
 Reduced cost  improved competitive advantage
 Useful for capacity planning
Can lead to more realistic time estimates, thus leading to
more accurate capacity needs assessment

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