1. Learning Curves

2. Learning Curve
Past experience indicates that individuals learn by experience (i.e., get better and better at the job by carrying out the tasks more and more).

3. Learning curve
This phenomenon was first reported by T. P. Wright in But, the learning curve theory is based on assumptions such as those listed next Chase, R B., 1981

4. Underlying Principles of Learning Curves
1. Each time you perform a task it takes less time than the last time you performed the same task 2. The extent of task time decreases over time 3. The reduction in time will follow a predictable pattern
Reasons for the effect
Examples
NASA quotes the following experience curves:[4]
Aerospace 85%
Shipbuilding 80-85%
Complex machine tools for new models 75-85%
Repetitive electronics manufacturing 90-95%
Repetitive machining or punch-press operations 90-95%
Repetitive electrical operations 75-85%
Repetitive welding operations 90%
Raw materials 93-96%
Purchased Parts 85-88%
There are a number of reasons why the experience curve and learning curve apply in most situations.[citation needed] They include:
Labour efficiency - Workers become physically more dexterous. They become mentally more confident and spend less time hesitating, learning, experimenting, or making mistakes. Over time they learn short-cuts and improvements. This applies to all employees and managers, not just those directly involved in production.
Standardization, specialization, and methods improvements - As processes, parts, and products become more standardized, efficiency tends to increase. When employees specialize in a limited set of tasks, they gain more experience with these tasks and operate at a faster rate.
Technology-Driven Learning - Automated production technology and information technology can introduce efficiencies as they are implemented and people learn how to use them efficiently and effectively.
Better use of equipment - as total production has increased, manufacturing equipment will have been more fully exploited, lowering fully accounted unit costs. In addition, purchase of more productive equipment can be justifiable.
Changes in the resource mix - As a company acquires experience, it can alter its mix of inputs and thereby become more efficient.
Product redesign - As the manufacturers and consumers have more experience with the product, they can usually find improvements. This filters through to the manufacturing process. A good example of this is Cadillac's testing of various "bells and whistles" specialty accessories. The ones that did not break became mass produced in other GM products; the ones that didn't stand the test of user "beatings" were discontinued, saving the car company money. As GM produced more cars, they learned how to best produce products that work for the least money.
Value chain effects - Experience curve effects are not limited to the company. Suppliers and distributors will also ride down the learning curve, making the whole value chain more efficient.
Network-building and use-cost reductions - As a product enters more widespread use, the consumer uses it more efficiently because they're familiar with it. One fax machine in the world can do nothing, but if everyone has one, they build an increasingly efficient network of communications. Another example is accounts; the more there are, the more efficient the network is, the lower the cost to everyone of using it.
Shared experience effects - Experience curve effects are reinforced when two or more products share a common activity or resource. Any efficiency learned from one product can be applied to the other products. 3

5. The Experience Curve Cost or price per unit
As plants produce more products, they gain experience in the best production methods and reduce their costs per unit
Total accumulated production of units
Cost or
price
per unit
Yesterday
Today
Tomorrow

6. Learning Curve assumptions
The learning curve may vary one product to another and from one organization to another. The rate of learning depends on factors such as the quality of management and the potential of the process and products

7. Moreover, it may be said that any change in personnel, process, or product disrupts the learning curve. Consequently, there is a need for the utmost care in assuming that a learning curve is continual and permanent.

8. The learning curves are found to be quite useful in a variety of applications, including strategic evaluation of company and industry performance, internal labor forecasting, establishing costs and budgets, production planning, external purchasing, and subcontracting of items

9. Example of a Learning Curve
Suppose you start a term paper typing business. You time yourself on the first paper, then the second, and so on.
Term paper 1 2 3 4 5 6
Time (in Minutes)
100 90
84.62
81.00
78.30
76.16
Note that only 90 of 100 minutes are used in the second repetition. This is an example of a 90% learning curve. 4

10. All learning curves have this downward sloping curve.
Plotting the Learning Curve
All learning curves have this downward sloping curve.

11. Logarithmic Analysis
LO 2