ch03 PDF
ch03 PDF
Learning Curves
LEARNING OBJECTIVES
After completing this supplement, you should be able to:
1. Use the learning-curve formula or learning curve chart to estimate the
time required to produce a given unit.
2. Use historical data to estimate the learning factor
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2 PART I BUILDING CAPABILITIES TO COMPETE GLOBALLY
The curve shown in Exhibit S3.1 is called a learning curve and indicates how the time
required per unit of product decreases as the cumulative number of units produced
increases. This curve is based on the formula
Yn = Y1nb
where
Yn = the time it will take to produce the nth unit
Y1 = the time it took to produce the first unit
n = number of units
r = learning factor
log r
b=
log 2
Although this formula may look formidable, what it actually indicates is that the time per
unit will decrease by a constant factor every time the cumulative number of units pro-
duced doubles. The learning factor indicates the relation between these two times.
PROBLEM A learning factor of .8, which is usually referred to as an 80 percent learning curve,
would mean that the time it takes to produce the second unit is only 80 percent of
the time it took to produce the first unit. Then the time it takes to produce the fourth
unit will be 80 percent of the time it took to produce the second, and so on. For a job
that required ten hours to produce the first unit, the time for each successive unit
with an 80 percent learning curve would be
Unit Number (N) Time per Unit (Hours)
1 10
2 .8 (10) = 8
4 .8 (8) = 6.4
8 .8 (6.4) = 5.12
16 .8 (5.12) = 4.096
Unfortunately, the approach used above to determine the time per unit when the
cumulative number of units doubles cannot be used to determine how long it should
take to produce the third unit, the fifth unit, and so on. In those situations, we must
resort to the learning-curve formula.
PROBLEM An aircraft company is producing a new commercial jet. Based on past experience,
the learning factor is .7, and it is expected that the first unit will require 1,000 hours
to produce. How long should the fifth unit take?
log.7
b=
log 2
.1549
=
.3010
= .5146
Yn = Y1nb
= 1000(5).5146
= 436.8 hours
These calculations can become rather tedious if they must be performed a large num-
ber of times. Fortunately, tables exist that eliminate the need for the detailed calculation
shown above. Such a table is shown in Exhibit S3.2.
Yn
nb =
Y1
Y
b log n = log n
Y
1
log (Yn Y1 )
b=
log n
log r
b=
log 2
log r = b log 2
r = 10b log 2
PROBLEM An electronics manufacturer has found that the time needed to produce a certain cir-
cuit board has been decreasing. While it took 4.8 hours to produce the first board, the
125th one required only .95 hour. What learning factor is in effect?
log (Yn Y1 )
b=
log n
log(.95 / 4.8)
=
log(125)
.703518
=
2.09691
= .33555
r = 10b log 2
= 10(.3355 log 2)
= 10(.101)
= .79
PROBLEM The company of Forges et Ateliers is a French metalworking shop located in the city
of Clermont-Ferrand. It recently received an order to produce 100 units of a new type
of forging. Based on past experience, the company expects an 85 percent learning
curve to be in effect. If the first unit required 2.4 direct labor hours and employees
are paid at the rate of FF (French francs) 70 per hour, what will be the average direct
labor cost on the entire order?
Using the learning-curve chart, the total time for 100 units will be
2.4(43.75) = 105 hours
The total cost for this number of hours will be
FF 70(105) =FF 7,350
The average direct labor cost per unit will be total cost divided by number of units,
or
FF 7350
= FF 73.5 per unit
100
6 PART I BUILDING CAPABILITIES TO COMPETE GLOBALLY
SUMMARY
According to the learning-curve formula, the time required to produce one unit of a
product decreases by a constant percentage each time the cumulative number of units
produced is doubled.
By rearranging the learning-curve formula, historical data can be used to estimate the
learning factor.
KEY TERMS
learning curve learning factor
SOLVED PROBLEMS
1. A company has estimated that a learning curve of 80 percent applies to its operations.
The first unit required four hours.Using the learning-curve formula, determine how
long the second and third units will take to produce Using the learning-curve chart in
Exhibit S3.2, determine how long it will take to produce the first 100 units.
SOLUTION
a. The second unit should take only 80 percent as long to make as the first unit if an
80 percent learning factor is in effect.
log r log.8
b= =
log 2 log 2
.0969
=
.3010
= .3219
Yn = Y1nb
= 4(3).3219
= 2.81 hours
c. In Exhibit S3.2, we go to the 80 percent column and follow down Total Time to
the row for unit number 100. The value there is 32.65. This is then multiplied by
the time it took for the first unit.
SOLUTION
a.
Y1 = 10, Yn = 6, n = 28
log (Yn Y1 )
b=
log n
log(6 /10)
=
log(28)
.22185
=
1.447158
= .1533
r = 10b log 2
= 10(.1533 log 2)
= 10(.046)
= .90
321.4 hours
= 6.428 hours per unit
50 units
PROBLEMS
1. A company has determined from past experience that its learning-curve percentage is
85 percent. If it takes 1,000 hours to produce the first unit, how long should the sec-
ond, fourth, and eighth units each take?
2. The Nicholas Tool Company has just introduced a new line of CNC lathes. Based on
past experience, the company expects a 90 percent learning curve to apply to the man-
ufacturing time for these lathes. The first unit required 400 hours to produce.
Nicholas estimates that each hour of production time costs an average of $30. Based
on this, how long will it take to produce the companys first three units, and what will
be the total production cost of these machines?
3. The Qewb Brothers provide tax assistance services. Each year they hire a new group of
employees and train them in preparing tax forms. Based on past experience, the time
it takes one of these employees to prepare a standard tax return follows a 75 percent
learning curve. However, Herbie Qewb, one of the brothers, has designed a new train-
ing program to lower this to 70 percent. If the first tax return takes an average of two
hours to prepare and these employees are paid $10 per hour, what would be the cost
savings per employee on the first four returns if the new training program is adopted?
4. Arlene Crouch has become interested in building radio-controlled (R/C) airplanes.
Her first plane took 100 hours to build. However, Arlene became more proficient and
found that her tenth plane required only 53.85 hours. What is Arlenes learning factor
for building R/C airplanes?
8 PART I BUILDING CAPABILITIES TO COMPETE GLOBALLY
5. Steve Tasks has just started up a new computer company that manufactures the
LaST computer. Steve found the first LaST computer assembled in his new plant
required thirty-eight direct labor hours to produce. Based on past experience, Steve
expects an 80 percent learning curve to apply. If direct labor costs $12 per hour, what
will be the average cost of direct labor on Steves first fifty LaST computers?
6. The Computer Company, a computer sales and service operation, has just contracted
with a regional insurance company to install a local area network (LAN) involving ten
computers in the insurance companys headquarters office. Part of the network
installation involves installing a network board and software in each of the ten com-
puters. Employees of the Computer Company have no previous experience with this
particular installation. It is estimated that the first unit will require thirty minutes of
installation time.
a. Draw graphs of the installation time required for each of the ten computers, using
75 percent and 85 percent learning curves.
b. Determine the total cumulative installation time for each learning-curve rate.
7. Memory Associates has just developed a new supercomputer. However, the supercom-
puter business has become extremely competitive, and Memory Associates wants to
introduce its new product at a price that will undercut the competition. The first unit
produced required $1 million for materials and 200,000 hours of direct labor at $15
per hour. If Memory Associates prices its new supercomputer at $2 million per unit,
how many units must be produced and sold before the selling price will cover the
direct labor and material costs if an 80 percent learning curve is in effect?
MINI-CASES
noted that the machinist appeared to be having some trouble with machining the part and
thought that performance would improve as more experience was gained with the job. The
allowance factor for this job is 20 percent.
Brock Thurston is still unsure. Even though the times are dropping for this job, they
are still above the standard. He wonders whether the standard should be reset due to the
uniqueness of the work required under the new contract. He is also worried because the
first ten pieces of this order must be completed within another 7.5 regular time hours-a
time that seems unreasonable based on how long it took to finish the first three. A late
delivery could jeopardize any future orders from this customer. Brock wonders if he should
plan to schedule overtime to get the job done.
1. Does a learning curve appear to be present? Estimate the learning factor.
2. How long should it take to complete the first ten units?
3. Should overtime be scheduled?
SELECTED BIBLIOGRAPHY
Argote, Linda and Epple, Dennis. Learning Curves in Manufacturing Science 247 (February 1990): 920-24.
Camm, Jeffrey. A Note on Learning Curve Parameters Decision Sciences 16, no. 3 (Summer 1985): 325-27.
Yelle, Louis E. The Learning Curve: Historical Review and Comprehensive Survey Decision Sciences 10, no. 2
(April 1979): 302-28.