Supplement to Chapter 7 Learning Curves Learning curves summarize this phenomenon.

The degree of improvement and the number of tasks needed to realize the major portion of the improvement is a function of the task being done. There are two ways to obtain the times. One is to formula; the other is to use a table of values. First, consider the formula approach. The formula is based on the existence of a linear relationship between the time per unit and the number of units when these two variables are expressed in logarithms. The unit time for the nth unit can be computed using the formula: Where Tn Time for nth unit T1 Time for first unit B 1n (learning percent)/1n2 To use the formula, you need to know the time for the first unit and the learning percentage. The second approach is to use a learning factor obtained from a table. The table shows two things for selected learning percentages. One is a unit value for each of the outputs listed. This enables us to easily determine how long any unit will take to produce. The second is a cumulative value, which enables us to compute the total number of hours needed to complete any given number of repetitions. The computation for both is a relatively simple operation. Multiply the table value by the time required for the first unit. Applications of Learning Curves 1. Manpower planning and scheduling 2. Negotiated purchasing 3. Pricing new products 4. Budgeting, purchasing, and inventory planning The learning curve project is help managers to plan costs, and labor, purchasing, and inventory need. The learning principles can sometimes be used to evaluate-new workers during training periods. The comparisons reveal which workers are under qualified, average, and overqualified for a given type of work. Moreover, measuring a workers progress can help predict whether the worker will make a quota within a required period of time. Operations Strategy Learning curves often have strategic implications for market entry, when an organization hopes to rapidly gain market share. The use of time-based strategies can contribute to this. An increase in market share creates additional volume, enabling operations to quickly move down the learning curve, thereby decreasing its costs and, in the process, gaining a competitive advantage. In some instance, the volumes are sufficiently large that operations will shift from batch mode to repetitive operation, which can lead to further costs reduction. Tn = T1 x nb

Cautions and Criticisms 1. Learning rates may differ from organization and by type of work. 2. Projections based on learning curves should be regarded as approximation of actual times and treated accordingly. 3. Because time estimates are based on the time for the first unit, considerable 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, especially near the end of a job. 5. Some of the improvements may be more apparent than real: Improvements in times may be caused in part 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. 7. Users of learning curves sometimes fail to include carryover effects; previous experience with similar activities can reduce activity times, although it should be noted that the learning rate remains the same. 8. Shorter product life cycles, flexible manufacturing, and cross functional workers can affect the ways in which learning curves may be applied.