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Learning Curves

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16 views13 pages

Learning Curves

Uploaded by

210100094
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SESSION 2: LEARNING Dr.

Priyank Sinha
CURVES
PRINCIPLE OF LEARNING
EFFECT
Learning curve is based on the premise that the organization and
individuals get better (more efficient) at their task as the task is
repeated over time.
Phenomenon is exhibited in many facets of life.
1. Your driving skill improves after repeated trials at driving.
2. You practise mathematics problems before the exam to solve the
examination problem in reasonably less time.
3. You take less time to cook a dish after you have cooked it several
times in the past.
4. And so on…
GENESIS OF LEARNING
CURVE
T.P. Wright in 1936 used learning curves to mathematically
represent this relationship.
In his report, he described how direct labour cost of making a
particular airplane decreases with learning. This relationship was
represented by negative exponential curve.
Later, several aircraft manufacturer confirmed the relationship to
be applicable in their organization too.
However, it was noticed that the learning rate varied across
organization, different product, etc.
An academic interest arose to base strategic decision making on
this theory and how to improve the learning rate.
TYPICAL LEARNING CURVE
MATHEMATICAL
REPRESENTATION :
ARITHMETIC APPROACH
Each time production volumes doubles, labour-hours/per unit declines by a
constant factor called learning rate. For example: if learning rate is 80% and the
first unit took 100 hours to produce then values in the following table are valid -
Nth Unit Produced Hours for Nth Unit
1 100.0
2 80 = (0.8*100)
4 64.0 = (0.8*80)
8 51.2 = (0.8*64)
16 41.0 = (0.8*51.2)

Obviously, this approach cannot be used to calculate the hours required to


produce, say 3, 7, 10 units.
MATHEMATICAL
REPRESENTATION :
LOGARITHMIC APPROACH
If

Then

Obviously it enables us to calculate the hours required at any unit


produced.
LOGARITHMIC APPROACH :
WORKED EXAMPLE
Learning rate for a particular operation is 80%, and the first unit of
production took 100 hours. The hours required to produce the third
unit may be computed as below
Solution:

= 100*
= 70.2 labour-hours. (Answer)
This method requires some computations. There is a also much
simpler approach available.
LEARNING CURVE
COEFFICIENT APPROACH
If

then Tn=T1*C
WORKED EXAMPLE

A shipyard takes 125000 labour hours to produce first of many


boats. 2nd and the 3rd boats have been produced with the learning
rate of 85%. At 40$ per labour-hour, how much you expect to pay
for the fourth unit?
Solution: we know that Tn = T1C
Hence, T4 = 125000*0.723
= 90,375 hours.
Cost incurred is 90,375*40 = $3,615,000
MANAGERIAL
CONSIDERATIONS IN USING
LEARNING CURVES
A good representative estimate of learning rate is very crucial. Using industry
average is not advisable, as competitive niches and type of work differs.
Learning rate depends upon process complexity, rate of capital additions (might
hamper repeatability). Any change in the process can negatively effect learning
rate. Too frequent changes in the process must be avoided.
Learning rate reduces with higher level of automation.
Learning effect is most pronounced in the initial phases, hence technology
adoption should be accordingly.
Product life cycle also effects the benefit the organization can yield from learning.
For a team, learning rate may be restricted by the bottleneck.
Total quality management, continual improvement program have large effect on
learning rate.
USES OF LEARNING CURVES
IN INDUSTRY
Some of the uses include
Internal: Labour forecasting, Scheduling, Establishing cost and
budgets.
External: Supply chain negotiations (Bid preparation).
Strategic: Evaluation of company performance, including cost and
pricing.
STRATEGIC EXAMPLE

Company must follow an aggressive pricing policy


It should focus on continuing productivity improvement and cost reduction
Keep capacity growing according to the demand.
OTHER EXAMPLES
The Minnesota Coach Company has just
been given the following production
schedule for ski-lift gondola cars. This
product is considerably different from any
others the company has produced.
Historically, the company‘s learning rate has
been 80 percent on large projects. The first
unit took 1,000 hours to produce.
1) Estimate how many hours would be
required to complete the 38th unit.
2) If the budget only provides for a
maximum of 30 direct labor employees in
any month and a total of 15,000 direct labor
hours for the entire schedule, will the budget
be adequate? Assume that each direct labor
employee is productive for 150 work hours
each month.

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