Learning Curves McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

You should be able to: 1. Explain the concept of a learning curve 2. Make time estimates based on learning curves 3. List and briefly describe some of the main applications of learning curves 4. Outline some of the cautions and criticisms of learning curves 5. Estimate learning rates from data on job times Instructor Slides 7S-2

Learning curve The time required to perform a task decreases with increasing repetitions The degree of improvement is a function of the task being done Short, routine tasks will show modest improvement relatively quickly Longer, more complex tasks will show improvement over a longer interval Instructor Slides 7S-3

Instructor Slides 7S-4

The learning effect is attributed to a variety of factors: Worker learning Preproduction factors Tooling and equipment selection Product design Methods analysis Effort expended prior to the start of work Changes made after production has begun Changes in work methods Changes in tooling and equipment Managerial factors Improvements in planning, scheduling, motivation, and control Instructor Slides 7S-5

The learning effect is predictable The learning percentage is constant Every doubling of repetitions results in a constant percentage decrease in the time per repetition Typical decreases range from 10 to 20 percent Instructor Slides 7S-6

Instructor Slides 7S-7

7S-8 90% learning percent means 10% decrease in unit time with each doubling of repetition 80% learning percent means 20% decrease in unit time with each doubling of repetition Question: What does 100% learning percent imply?

7S-9

Each time cumulative output doubles, the time per unit for that amount should be approximately equal to the previous time multiplied by the learning percentage. If the first unit of a process took 100 hours and the learning rate is 90%: UnitUnit Time (hours) 1= (100)= (90)= (81)= (72.9)= (65.61)= Instructor Slides 7S-10

Instructor Slides 7S-11

If the learning rate is 90, and the first unit took 100 hours to complete, how long would it take to complete the 25 th unit? Instructor Slides 7S-12

The learning factor approach uses a table that shows two things for selected learning percentages: Unit value for the number of repetitions (unit number) Cumulative value, which enables us to compute the total time required to complete a given number of units. Instructor Slides 7S-13

If the learning rate is 90, and the first unit took 100 hours to complete, how long would it take to complete the 25 th unit? How long would it take to complete the first 25 units? Instructor Slides 7S-14

7S-15 A contract calls for the production of 20 jets. The initial unit required 400 days of direct labor. The learning percent is 80%.

7S-16 Q1: Calculate the time of the 5 th unit Approach 1 – using the formula

7S-17 Q1: Calculate the time of the 5 th unit Approach 2 using the learning Curve Coefficients table (7S-1, page 346)

7S-18

7S-19 Q2 – Expected time for the 20 th jet T 20 = (400) X (.381) = labor days Q3 – Expected total time for all 20 jets T 1-20 = (400) X (10.485) = 4,194 labor days Q4 – Average time per jet: Average time = 4,194/20 = labor days

7S-20 Given T 2 = 10 and 80% learning percent, find the expected time for the 5 th unit T 2 = 10 = T 1 X (.8) T 1 = 10 /.8 = 12.5 T 5 = 12.5 X = 7.45

Useful application areas: 1. Manpower planning and scheduling 2. Negotiated purchasing 3. Pricing new products 4. Budgeting, purchasing, and inventory planning 5. Capacity planning Instructor Slides 7S-21

1. Learning rates may differ from organization to organization and by type of work Base learning rates on empirical studies rather than assumptions where possible 2. Projections based on learning curves should be regarded as approximations of actual times 3. Because time estimates are based on the first unit, care should be taken to ensure that the time is valid 4. It is possible that at some point the curve might level off or even tip upward Instructor Slides 7S-22

5. Some of the improvements may be more apparent than real: improvements in times may be caused by increases in indirect labor costs 6. In mass production situations, learning curves may be of initial use in predicting how long it will take before the process stabilizes The concept does not usually apply because improvement in time per unit is almost imperceptible Instructor Slides 7S-23

7. Users of learning curves fail to include carryover effects from previous experiences 8. Shorter product life cycles, flexible manufacturing, and cross-functional workers can affect the ways in which learning curves may be applied Instructor Slides 7S-24

Learning curves have strategic implications for: Market entry when trying to rapidly gain market share As volume increases, operations is able to move quickly down the learning curve Reduced cost  improved competitive advantage Useful for capacity planning Can lead to more realistic time estimates, thus leading to more accurate capacity needs assessment Instructor Slides 7S-25