1. Learning Curves Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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

3. 7S-3 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 LO 7s.1

4. 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 LO 7s.1

5. 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 LO 7s.1

6. 7S-6 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 2.90(100)= 90 4.90(90)= 81 8.90(81)= 72.9 16.90(72.9)= 65.61 32.90(65.61)= 59.049 LO 7s.2

7. 7S-7 LO 7s.2

8. 7S-8 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? LO 7s.2

9. 7S-9 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. LO 7s.2

10. 7S-10 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? LO 7s.2

11. 7S-11 Useful application areas: 1. Manpower planning and scheduling 2. Negotiated purchasing 3. Pricing new products 4. Budgeting, purchasing, and inventory planning 5. Capacity planning LO 7s.3

12. 7S-12 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 LO 7s.4

13. 7S-13 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 LO 7s.4

14. 7S-14 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 LO 7s.4

15. 7S-15 LO 7s.5 Unit Completion Time (hours) 115.9 2 12.0 3 10.1 4 9.1 5 8.4 6 7.5 A manager wants to determine an appropriate learning rate for a new type of work his firm will undertake. He has obtained completion times for the initial six repetitions of a job of this type. What learning rate is appropriate? According to theory, the time per unit decreases at a constant rate each time the output doubles (e.g., 1 to 2, 2 to 4, and 3 to 6). The ratios of these observed times will give us an approximate rate. Not surprisingly, there is some variability; the rate is usually a smoothed approximation. Even so, the ratios are fairly close – a rate of 75 percent in this case.