The document discusses learning curves, which model how the time and costs to produce a product decrease as a workforce gains experience making it. As a workforce learns, there is a big reduction in the time needed to make additional units. The learning rate expresses the percentage reduction in time, such as an 80% learning curve. There are two methods to calculate learning curves - a tabular approach that calculates average times when output doubles, and an algebraic approach that uses an equation to calculate the time for any unit based on variables like time for the first unit, cumulative output, and the learning factor derived from the learning rate. Examples are provided to demonstrate calculating times for single units, ranges of units, and multiple ranges.

1. Prepared by: Jessy Chong
URL: chongsk818.blogspot.com

2.  Use to forecast the production time and labour
costs in circumstances where a work force
makes a new product and improves its efficiency
with experience and learning.
 The learning effect is that as the work force
learns from experience how to make the new
product, there is a big reduction in the time to
make additional units.
 The learning rate is expressed as a percentage
value, such as 80% learning curve.

3.  There are two methods can be used:-
 Method 1:The tabular approach
 Method 2:The algebraic approach
 Tabular Approach
 This method can only be used to calculate average times
when cumulative output doubles.
 The average production time is x% (learning rate) of what
is was before.

4.  For example, - pg46
Time taken for 1st unit is 100 hours.
Assume learning rate of 80%.
Cumulative
number of units
(x)
Cumulative average time
per unit (hours)
(y)
Cumulative total
time (hours)
(xy)
Incremental
total time
(hours)

5.  The formula:-
 y = axb
 Where y is the cumulative average cost or time to date
 x is the cumulative output
 a is the cost or time taken for the first unit
 b is the learning factor
 b = log learning rate
log 2
 The formula approach is used to calculate the
incremental time for ANY unit where a learning curve
applies.

6.  Example, (pg46)
 To calculate the time to make the 3rd unit:
1) Calculate the total time for the first 3 units
2) Calculate the total time for the first 2 units
3) The time for the 3rd unit is the difference
between (1) and (2).
Total time (xy) = 3 x 100 (3) ^ (log0.8/log2)

7. 1) Calculate time for a single unit.
 Eg,Time for the 10th unit
 =Total time for 10u –Total time for 9u
2) Calculate time for a range of units
 Eg 1,Time for first 10u
 = xy
 Eg 2,Time for 11th to 40th units
 =Total time for 40u –Total time for 10u
3) Calculate time for multiple range of unit (UseTable)
 Eg,Time for first 10u, next 15u and further 12u
4) Learning rate stops (time/u stabilised after certain units)
 Eg, The learning rate is applicable up to production of 200u, with the time/u
thereafter stabilised at the time for the 200th units. Calculate time for 300u.
 = Calculate time for 200 + time for 100u (separately)