Learning effect and Learning Curve

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The Learning Curve Theory

Learning Curve Theory is concerned with the idea that when a new job, process or activity commences for the first time, it is likely that the workforce involved will not achieve maximum efficiency immediately.

Repetition of the task is likely to make the people more confident and knowledgeable and will eventually result in a more efficient and rapid operation.

Eventually the learning process will stop after continually repeating the job (steady state).

As a consequence the time to complete a task will initially decline and then stabilise once efficient working is achieved.

The cumulative average time per unit is assumed to decrease by a constant percentage every time that output doubles.

Cumulative average time refers to the average time per unit for all units produced so far, from and including the first one made.

The following is an example of an 80% learning curve:

The cumulative average time required per unit of output is reduced to 80% of the previous cumulative average time when output is doubled.

The Learning Curve Theory

The learning curve effect can be calculated by:

1. reducing cumulative average time by the learning rate each time output doubles in a table:

2. using the formula:

y = axb

where

y = cumulative average time (or average cost) per unit or per batch to produce    x units

a = time (or cost) taken for the first unit or batch

b = log r/log 2 (r = index of learning, expressed as a decimal)

x = cumulative output in units or in batches

Application of the Learning Curve Theory

  1. the activity is labour intensive (rather than highly mechanized)

  2. a repetitive process for each unit

  3. low turnover of labour

  4. early stages of production

  5. no prolonged breaks in production

Cessation of the Learning Curve Theory – The Steady State

The learning effect will only apply for a certain range of production. Once the steady state is reached, the direct labour hours will not reduce any further and this will become the basis on which the budget is produced.

The steady state will occur when: -

  • machine efficiency restricts further improvements

  • machines have reached the limits of safe running speeds

  • there is a limit to human dexterity

  • some processes cannot be speeded up any more (for e.g. a chemical reaction)

  • new, inexperienced staff will replace practiced ones from time to time, slowing things down again.

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