Learning Curves

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 1936.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

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

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.

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

11. Logarithmic Analysis LO 2