The Learning Curve is an unique 

initiative of Learning together. The purpose is to share

thoughts, viewpoints and experiences from vibrant and most dynamic Pharmaceutical industry.
Learning curve is a Graphical representation of the common sense principle that more one does
something the better one gets at it. Learning curve also shows the rate of improvement in performing a
task as a function of time, or the rate of change in average cost as a function of cumulative output. A
learning curve is a graphical representation of the changing rate of learning (in the average person) for a
known activity or tool. As you know, the phrase “learning curve” by itself refers to a rate of learning that
will be required to do something new. Typically, the increase in maintenance of information is sharpest
after the early attempts, and then gradually evens out, meaning that less and less new information is
retained after each repetition.

The learning curve can also represent at a glimpse the initial difficulty of learning something
and, to an extent, how much there is to learn after initial experience. For example, the Windows
program Notepad is extremely simple to learn, but offers little after this. It is possible for
something to be simple to learn, but hard to master or hard to learn with little beyond this.

Every activity or undertaking has a learning curve. The concept of a learning curve was
introduced by T.P. Wright to the aircraft industry in 1936. As originally set up by Wright, the
learning curve is a measure of the so-called doubling effect, that is, as the quantum of production
is doubled, the cost of resources consumed in the process is reduced.

The premise of the learning curve theory is quite simple, practice makes perfect or the repetition
of the same procedures should result in fewer units of time or efforts devoted to a particular
activity or undertaking. It is for this reason that the learning curve is sometimes referred to as the
experience curve or progress function.

Learning curve in psychology and economics:

The first person to describe the learning curve was Hermann Ebbinghaus in 1885. He found that
the time required memorizing a nonsense syllable increased sharply as the number of syllables
increased. Psychologist, Arthur Bills gave a more detailed description of learning curves in 1934.
He also discussed the properties of different types of learning curves, such as negative
acceleration, positive acceleration, plateaus, and ogive curves. In 1936, Theodore Paul Wright
described the effect of learning on labor productivity in the aircraft industry and proposed a
mathematical model of the learning curve.

The economic learning of productivity and efficiency generally follows the same kinds of
experience curves and have interesting less important effects. Efficiency and productivity
improvement can be considered as whole association or industry or economy learning processes,
as well as for individuals. The general pattern is of first speeding up and then slowing down, as
the practically achievable level of methodology improvement is reached.
In Wright's Model, the learning curve function is defined as follows:

Y = aXb

where: Y = the cumulative average time (or cost) per unit.

             X = the cumulative number of units produced.
              a = time (or cost) required to produce the first unit.
              b = slope of the function when plotted on log-log paper.
                  = log of the learning rate/log of 2.

Broader understanding of the learning curve:

Initially introduced in learning and behavioral psychology, the term has acquired a broader
interpretation in due course, and expressions such as "experience curve", "improvement curve",
"cost improvement curve", "progress curve", "progress function", "startup curve", and
"efficiency curve" are often used in both the cases. In economics the subject is rates of
"development", as development refers to a entire system of learning process with varying rates of
development. Normally speaking all learning displays incremental change over time, but
describes an "S" curve which has different appearances depending on the time scale of
observation. It has now also become connected with the evolutionary theory of punctuated
equilibrium and other kinds of revolutionary change in complex systems generally, relating to
innovation, organizational behavior and the management of group learning, among other fields.
These processes of rapidly growing new form appear to take place by complex learning within
the systems themselves, which when visible, display curves of changing rates that pick up the
pace and slow down.
Assumptions on learning curve:
 The time required to complete a specified task or unit of a product or item will be less each
time the task is performed;

 The unit time will reduce at a decreasing rate;

 The decrease in time will follow a certain pattern, such as negative exponential
distribution shape.

 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

 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.

Learning curve and learning curve effect

The understanding of "learning curves" was first experimental by the 19th Century German
psychologist Hermann Ebbinghaus according to the difficulty of memorizing varying numbers of
verbal stimuli. Subsequent learning about the difficult processes of learning is discussed in the
Learning curve article.The experienced learning rates for investigative discovery and
development processes, for individuals and organizations, is more the focus of the main Learning
curve article.

As individuals and/or organizations get more qualified at a task, they usually become more
efficient at it, following a progression of the learning first getting easier and then harder as one
approaches a limit. A "steep" learning curve, in colloquial usage, usually means experiencing a
large and increasing amount of effort for a constant amount of learning, i.e. approaching a
natural limit. Much the reverse is the meaning of a steep slope in a learning progress curve. A
learning progress curve is steep when very little effort is required, as further discussed in the
main article.

The rule used for representing the learning curve effect states that the more times a task has
been performed, the less time will be required on each consequent iteration. It did not vary at
different scales of operation. Learning curve theory states that as the quantity of items produced
doubles, costs decrease at an expected rate. This expected rate is described by Equations 1 and 2.
The two equations differ only in the definition of the Y term, but this difference can be
significant.
1. This equation describes the basis for what is called the unit curve. In this equation, Y
represents the cost of a specified unit in a production run. For example, If a production run has
generated 200 units, the total cost can be derived by taking the equation below and applying it
200 times (for units 1 to 200) and then summing the 200 values. This is cumbersome and
requires the use of a computer or published tables of predetermined values.

[2]

where

 is the number of direct labour hours to produce the first unit

 is the number of direct labour hours to produce the xth unit
 is the unit number
 is the learning percentage

2. This equation describes the basis for the cumulative average or cum average curve. In this
equation, Y represents the average cost of different quantities (X) of units. The significance of
the "cum" in cum average is that the average costs are computed for X cumulative units.
Therefore, the total cost for X units is the product of X times the cum average cost. For example,
to compute the total costs of units 1 to 200, an analyst could compute the cumulative average
cost of unit 200 and multiply this value by 200. This is a much easier calculation than in the case
of the unit curve.

where

 is the number of direct labour hours to produce the first unit

 is the average number of direct labour hours to produce First xth units
 is the unit number
 is the learning percentage
 Some Information on Learning Curve Effects in U.S. Industrial Sector
Item/Area Cumulative Learning Curve Slop
Number Time Period
Description Parameter Percentage

1 Steel making 1920 1955 Units Production Worker 79

Produced labor-hour per unit
(UP) produced

2 Handheld 1975 1978 UP Average factory 74

calculators selling price

3 Assembly of 1925 1957 UP Direct labor 80

aircrafts hours per unit

4 Ford Motor 1910 1926 UP Price 86

Company
Model T
production

 The Table presents data on learning curve effects in the U.S. industrial sector. An 80%
learning rate is descriptive of certain operations in such areas as ship construction,
electronic data processing equipment, automatic machine production, and aircraft
instruments and frame assemblies.

 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.

 The learning curve theory is based on a doubling of productivity. More specifically, when
output or production doubles, the reduction in time per unit affects the learning curve
rate. For example, an 80% learning rate means the second unit takes 80% of the time of
the first unit, the fourth unit takes 80% of the second unit, eighth unit takes 80% of the
fourth unit, and so on.

Result:

LHm = LH1m C

Where:

LHm is the labor hours required to produce unit

LH1 is the labor hours to produce unit one or the first unit.

C is the learning curve slope and is expressed by

log of the learning rate/(log2)

The experience curve:

Learning curves, also called experience curves, relate to the much broader subject of natural
limits for resources and technologies in general. Such limits generally present themselves as
increasing complications that slow the learning of how to do things more efficiently, like the
well-known limits of perfecting any process or product or to perfecting measurements

The experience curve effect is broader in scope than the learning curve effect encompassing far
more than just labor time. It states that the more often a task is performed the lower will be the
cost of doing it. The task can be the production of any good or service. Each time cumulative
volume doubles, value added costs (including administration, marketing, distribution, and
manufacturing) fall by a constant and expected percentage. In the late 1960s Bruce Henderson of
the Boston Consulting Group (BCG) began to highlight the implications of the experience curve
for strategy. Research by BCG in the 1970s observed experience curve effects for various
industries that ranged from 10 to 25 percent.

Experience curve

These effects are often expressed graphically. The curve is plotted with cumulative units
produced on the horizontal axis and unit cost on the vertical axis. A curve that depicts a 15% cost
reduction for every doubling of output is called an “85% experience curve”, indicating that unit
costs drop to 85% of their original level.