LEARNING CURVES,Chapter Six,Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.,McGraw-Hill/Irwin,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,6-3,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.,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,Individual learning: improvement that results when people repeat a process and gain skill or efficiency from their own experience 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,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,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,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,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,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,