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Learning Curve

The document discusses learning curves, which graphically represent how the rate of learning changes for a given task. It provides examples of steep and gradual learning curves from industries like aircraft manufacturing. Mathematical models are presented for calculating learning curves based on factors like unit costs and direct labor hours. Managerial uses include pricing, production planning, and cost analysis. Limitations include assumptions, inability to model changes, and lack of accuracy.

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kinjali
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3K views

Learning Curve

The document discusses learning curves, which graphically represent how the rate of learning changes for a given task. It provides examples of steep and gradual learning curves from industries like aircraft manufacturing. Mathematical models are presented for calculating learning curves based on factors like unit costs and direct labor hours. Managerial uses include pricing, production planning, and cost analysis. Limitations include assumptions, inability to model changes, and lack of accuracy.

Uploaded by

kinjali
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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LEARNING CURVE

GROUP MEMBERS

 Timsy Aggarwal - 7404


 Forum Anam - 7405
 Rucha Asolkar - 7407
 Kinjal Gandhi - 7427
 Srushti Kshirsagar - 7449
Learning curve

“The term learning curve refers to a


graphical representation of the
changing rate of learning for a given
activity or tool.”
INTRODUCTION

 Also called improvement curve or


progress curve
 Graphical representation
 rate of improvement
 rate of change in average cost
 Employed in setting incentive rate
schemes
 Relation between cumulative output and
average unit cost
EXAMPLE

An 80 percent learning curve means


the per unit average cumulative cost
(in hours or dollars) falls to 80 percent
of the previous per unit average
cumulative cost as the cumulative
output doubles.
History

 1885- Hermann Ebbinghaus, the 1st person


 time required to memorize a nonsense
syllable increased sharply as the number of
syllables increased
 1934- Arthur Bills, psychologist
 discussed the properties of different types
of learning curves
 1936 - Theodore Paul Wright
 effect of learning on labour productivity in
the aircraft industry
 mathematical model of the learning curve
AIRCRAFT INDUSTRY

 1st copy of new airplane - $100million

 2nd copy of new airplane - $80million

 4th copy of new airplane - $64million

 8th copy of new airplane -$51 million


Types of learning curve

 Steep learning curve.

 Flat or gradual learning curve.


Steep learning curve:-

 Large gain of knowledge in the early stage.

 Rules are simple and quickly learn

 Difficult skill to learn.

 Harder to climb.

 Eg:- Chess
 Flat or gradual learning curve:-

 Rate of knowledge is slowly spaced.

 Gives ample time to imprint the procedure or


skills.
LEARNING CURVE
FORMULATION
Margin cost model

Formula :-

Ycx = ax-b

where,
Ycx = average cost of the first x units,
a = the first unit cost,
x = the cumulative unit number output,
b = the learning elasticity, which defines
the slope of the learning curve.
Direct labour hour model

Formula:

Y = KXn

where,
Y = the number of direct labor hours required to
produce the Xth unit,
K = the number of direct labor hours required
to produce the first unit,
X = the cumulative unit number,
n = log ϕ/log 2,
ϕ = the learning rate, and
1 - ϕ = the progress ratio.
Learning curve

Positive Curves Negative Curves

 Learn slowly at first and  Learn quickly at first and


then faster later on. then our progress slows.

 Learning is accelerating.  Learning is slowly.

 Eg: student learning  Eg: a child learning to tie


calculus. her shoes.
MANAGERIAL USES

 Pricing

 Production

 Financial planning

 Modernise or replace decisions


OTHER USES

• Capacity analysis and resource planning.


• Cost-reduction proposals pricing.
• Direct labour cost.
• Estimation of production-line performance.
• Break even estimation.
• Cost estimation, pricing and staff planning.
• Incentives for aggressive pricing in early
phases of a product life cycle.
LEARNING CURVE EFFECT

“The learning effect states that the more often a


task is performed, the less time will be
required on each iteration”.

Eg:- aircraft manufacturing, ship building, bridge


construstion, new product development,etc.
REASONS FOR THE EFFECT OF
LEARNING CURVE
 Labour efficiency
 Standardisation, specialisation and
methods of improvement
 Technology driven learning
 Changes in resource mix
 Product redesign
 Value chain effects
 Shared experience effect
LEARNING CURVE - zigzag
LIMITATIONS

 Depends on many assumptions


 Best results only in static system
 Difficulty in application
 Zigzag curve
 Old technique
 Money and time constraints
 Not accurate
Case-study

 Douglas Aircraft.
Factors that affecting learning
curves:-

a) The inherent capacity of an operation to


improve.

b) The degree to which the capacity is exploited.


Conclusion

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