Leaning Curve Analysis

Topics: Learning curve, Cost, Experience curve effects Pages: 3 (672 words) Published: December 25, 2012
Learning Curve Analysis

A Learning Curve is an industrial tool or formula for the expected reduction of unit costs for large quantity production of components. Learning curves draw from historic building experience to determine expected reductions in labor and materials costs. Expected reductions can be gauged from the labor and materials content of the manufactured item, plus the number of doublings of the initial production run. Estimators will apply learning curves under guidance from management. Cost estimates need to reflect the observed characteristic that costs will vary in proportion to the quantity produced. Quantity discounts on commodities or on commercially available components is one aspect. The amortization of fixed set-up or tooling costs over the production run for a forging or casting application is another. The most widely accepted cost-estimating tool for adjusting cost to volume is the learning curve. This assumes that repetitive production costs will decrease due to learning by the manufacturing staff - by increasing yields, increasing operation throughput, improved tooling, and substituting equipment for labor, eliminating unnecessary steps, and process improvement and substitution.

The application of learning curve theory is precisely connected to the process of improving performance of a system by means of repetitive nature over a particular task, operated by an organization or an individual. There are three fundamental assumptions followed by in the learning curve theory: 1) Total time for completing a task decreases with the increased repetition 2) Improvement percentage decreases with the increased volume of units 3) Improvement rate gets predictable after some time

The objective of this paper is to formulate better processes for Eatables and incorporate the theory of learning curve in the implementation of this process. Example:
Learning curves result in a fixed percentage decline in...
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