Post on 22-Nov-2014
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, and1 - ϕ = the progress ratio.
Learning curve
Positive Curves
Learn slowly at first and then faster later on.
Learning is accelerating.
Eg: student learning calculus.
Negative Curves
Learn quickly at first and then our progress slows.
Learning is slowly.
Eg: a child learning to tie 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