Learning Curve

Submitted by: Group 2; Section B

Asim Kumar Verma 2010056

Gautam Bansal 2010075
Hitesh Babbar 2010079
Jhanavi Thakkar 2010086
Karishma Dattani 2010092
 Contents
• Introduction
• Learning Curve Effects
• Factors affecting LC
• Applications
• Developing of learning curves
• Learning curve strategy
• Limitations of LC
 Introduction
• Learning : Relatively permanent change in
behavior due to repetition & rewards

• Two Types of learning

• Individual
• Organizational
 Types of learning
• Individual Learning
Improvement when individuals gain a
skill or efficiency by repetition of a job
• Organizational Learning
Improvement from the groups of
individuals from repetition and changes
in administration, equipment, and
product design
 Learning Curve Effect
• Time needed to produce a unit decreases
with each additional unit
• Time needed decreases at a decreasing rate
as cumulative production increases
• Decrease in time follows an exponential
curve called learning or experience curve
• Results in ‘learning curve effect’
– First observed in 1936 in airplane industry by T
P Wright
Learning Curves Vary by Product
and Industry
Aircraft Assembly 80%
Calculator 74%

Heart Transplants 79%

© 2001 by Prentice Hall, Inc.,

Upper Saddle River, N.J. 07458
Factors Affecting Learning Curves
Workers’
Skills
Material Work Methods

Learning
Product Curve Tools
Design

Continuous
Improvement Process Design
Methods
Applications of Learning Curves

Internal: labor forecasting,

scheduling, establishing
costs and budgets
External: supply chain negotiations
Strategic: evaluation of company and
industry performance,
including costs and pricing
 Developing Learning Curves
• Arithmetic approach
– Uses relationship: T2N = L * TN
– Useful only if values doubled

• Logarithmic analysis
– Uses relationship: TN = T1 N log L / log 2
• N = Unit of interest; T1 = Time for unit 1
– Can find time for any value of N

• Learning curve coefficients approach

– Uses relationship: TN = T1C (from Table)
 Learning Curve
Coefficients Table
Unit … 80% 85%
(N) … Unit Total Unit Total
Time Time Time Time
1 … 1.000 1.000 1.000 1.000
2 … .800 1.800 .850 1.850
3 … .702 2.502 .773 2.623
4 … .640 3.142 .723 3.345
: : : : : :
 Determining Time Example
You’re a planner for Viking
Ships. The first boat took
125,000 labor-hours to
make. Boats 2 & 3 were
produced with a learning
factor of 85%. How long
will the 4th boat take so that
raiding can begin?
© 1995 Corel Corp.
 Arithmetic Approach
• Formula: T2N = L * TN

• 1st unit: T1 = 125,000 hr.

• 2nd unit: T2 = L * T1
= .85 * 125,000
= 106,250 hr.
• 4th unit: T4 = L * T2
= .85 * 106,250
= 90,312 hr.
 Logarithmic Approach
• Formula: TN = T1 (N log L / log 2)
– N = Unit of interest
– T1 = Time for unit 1
– L = Learning rate

• T1 = 125,000 hr.

• 4th unit: T4 = T1 (N log L / log 2)

= 125,000 • (4 log .85 / log 2)
= 90,312 hr.
 Coefficient Approach
• Formula: TN = T1 C
– N = Unit of interest
– T1 = Time for unit 1
– C = Learning curve coefficient from table

• T1 = 125,000 hr.; C = .723 from Table

• 4th unit: T4 = T1 C
= 125,000 * (.723)
= 90,375 hr. (rounding C)
 Learning Curves
Determining Rate Example
• If you Know the First Ship took 125,000
hours to construct,
• And the 4th ship took 100,000 hours to
construct…
• What will your Learning Curve Be?

PowerPoint presentation © 2001 by Prentice Hall, Inc., E-15

to accompany Upper Saddle River, N.J. 07458
140000
120000
100000
Ship No
80000
60000 Time in Hours to
40000 Construct

20000
0
1 2 4

Learning Curve Rate 89%

 Exhibit : Units and Labour hour
required
Units 80% LC 90% 70%
1 100000 100000 100000
2 80000 90000 70000
4 64000 81000 49000
8 51200 72900 34300
16 40960 65610 24010
32 32768 59049 16807
64 26214 53144 11764.9
128 20972 47830 8235.43
256 16777 43047 5764.801
 A r i t h me t i c P l o t o f Le a r n i n g C u r v e s

120000

100000

80000

60000

40000

20000

Uni t s 8 0 % LC

90% 70%
 Learning Curves and Strategy
Hours per unit For a low price, high volume
120 strategy, a firm must lower unit
100 hours & costs to maintain profit
margins (i.e., steeper curve).
80
60 Industry average
40
Steeper curve
20
0
0 100 200 300 400
Cumulative units
 Learning Curves and Strategy

To pursue a learning curve steeper than

that of the industry, a firm must:
– follow an aggressive pricing policy
– focus on continuing cost reduction and
productivity improvement
– build on shared experience
– keep capacity growing ahead of demand

© 2001 by Prentice Hall, Inc., E-20

Upper Saddle River, N.J. 07458
 Limitations of Learning Curve
• Estimates should be developed for each
organization.
• Learning curves are based on time
estimates which must be accurate and
should be reevaluated when appropriate.
• Any changes in personnel, design or
procedure can be expected to alter the LC.
• The culture of the workplace, resource
availability and changes in the process
may alter the LC.
 Bibliography
• www.wikipedia.com
• www.hrdgateway.org
• Operations and Supply Management By
Chase, Shankar, Jacobs and Aquilano
• Under the Guidance of :Mr. J Sharma
Thank you