LEARNING CURVES

Chapter Six
McGraw-Hill/Irwin

Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

LO61: Understand what a learning

curve is and where learning curves are
applicable.
LO62: Plot and analyze learning curves.
LO63: Compare the impact of learning
on different industries.

6-2

Motivation: Boeing Teams Speed Up 737

Output

Boeing seeks ways to make its jets more efficient and avoid
expanding its factories and its costs.
Innovation teams are growing as Boeing seeks to increase output
of the narrow-body, workhorse plane by as much as 71 percent.
Workers here recently boosted the 737 output to 35 jets a month
from 31.5, and Boeings goal is to produce 42 planes a month in
2014.
Eventual goal is to reach 60 a month as they plan a retooled
version of the plane called the 737 Max.
Boeing today takes about 11 days for the final assembly of jets
at the Renton plant. Thats down from 22 days about a decade
ago. The companys near-term goal is to whittle that number to 9
days. Learning curves can help Boeing and all firms reach their
goals.

6-3

Application of Learning
Curves

Learning curve: a line displaying the

relationship between unit production
time and the cumulative number of units
produced
Wide range of applications
Can be used to estimate time and cost
One of the trade-offs in JIT

6-4

Types of Learning
1.

Individual learning: improvement

that results when people repeat a
process and gain skill or efficiency from
their own experience

2.

Practice makes perfect

Organizational learning: also comes

from changes in administration,
equipment, and product design
Expect to see both simultaneously
6-5

Learning Curve
Assumptions
1.

2.

3.

The amount of time required to

complete a given task or unit of a
product will be less each time the task
is undertaken.
The unit time will decrease at a
decreasing rate.
The reduction in time will follow a
predictable pattern.

6-6

Finding the Learning Rate

1.
2.
3.

Arithmetic tabulation
Logarithms
Some other curve-fitting method

6-7

Learning Curves Plotted as Times and

Numbers of Units

6-8

Plotting Learning Curves

In practice, learning curves are plotted

using a graph with logarithmic scales.
The unit curves become linear
throughout their entire range.
The cumulative curve becomes linear
after the first few unit.
Direct logarithmic analysis is more
efficient because it does not require a
complete enumeration of successive
timeoutput combinations.
6-9

Data for an 80 Percent Learning Curve

6-10

Resulting Learning Curve

Plots

6-11

Logarithmic Analysis
Yx Kx n
x Unit number
Yx Number of direct labor hours required to produce the x th unit
K Number of direct labor hours required to produce the first unit
log b
n
log 2
b Learning percentage

6-12

Example

First unit takes 100,000 hours

80 percent learning curve
Find hours for eighth unit

6-13

Improvement Curves: Table of Unit Values

6-14

Improvement Curves: Table of Cumulative

Values

6-15

Example 6.1: The Data

Contract for 11 boats, has completed 4 of

them.
Production manager has been reassigning
people to torpedo assembly.
The first boat required 225 workers, each
working a 40-hour week, while 45 fewer
workers were required for the second boat.
Manager has told them that this is just the
beginning and he will complete the last boat
with only 100 workers!

6-16

Example: The Solution

180 / 225 = 0.80

Look up unit 11 for an 80 percent
improvement ratio in Exhibit 6.4
( approximately equal to the average
of .4765 (corresponding to 10) and .
4493 (corresponding to 12)

0.4629

0.4269 x 225 = 104

6-17

Example 6.2: The Data

SUB Company has produced the first unit

of a new line of mini-subs at a cost of
$500,000.

$200,000 for materials and $300,000 for

labor

It has agreed to accept a 10 percent

profit and is willing to contract on the
basis of a 70 percent learning curve.
What will be the contract price for three
mini-subs?
6-18

Example 6.2: The

Solution

6-19

Estimating the Learning

Percentage
1.

2.

3.

Assume that the learning percentage will be

the same as it has been for previous
applications within the same industry.
Assume that it will be the same as it has been
for the same or similar products.
Analyze the similarities and differences
between the proposed start-up and previous
start-ups and develop a revised learning
percentage that appears to best fit the
situation.

6-20

Individual Learning
1.
2.
3.
4.
5.
6.
7.
8.

Proper selection of workers

Proper training
Motivation
Work specialization
Do one or very few jobs at a time
Use tools that support performance
Provide quick and easy access for help
Allow workers to help redesign tasks

6-21

An Example Involving Two Job Applicants

6-22

Organizational Learning

Organizations learn as well.

A main source is individual learning.

An organization also acquires knowledge in its

technology, its structure, documents it retains,
and standard operating procedures.
Knowledge can also be embedded in the
organizational structure.
Knowledge can depreciate if individuals leave
the organization.
Knowledge can depreciate if technologies
become inaccessible or difficult to use.
6-23

Managerial Considerations

6-24

Managerial Considerations

6-25