2. Class 1:
Matching Process and Product Life Cycles
Give an example of a product that has undergone the four phases of the
product life cycle and has achieved stability.
3. Class 1:
Matching Process and Product Life Cycles
The product life cycle is similar as a:
A. Rocket launch
B. Growth of a flower
C. Construction of a building
4. Class 1:
Learning and Experience Curves
What are the factors that contribute to the learning curve/experience curve
phenomenon?
5. Class 1:
Learning and Experience Curves
Learning Curves
• Improvement in production methods
• Improvements in the reliability and efficiency of the tools and machines
used.
• Better product design
• Improved production scheduling and inventory control
• Better organization of the workplace
Experience Curves
Time reduction and as result of it, the reduction of marginal cost, is a consequence
of learnings improvements.
6. Class 1:
Learning and Experience Curves
The marginal cost is related to the level of experience? Is the answer is affirmative, can we
identified several values of marginal cost related to the numbers of units produced, then,
what happens when we compare the marginal cost of two levels of production?
7. Class 1:
Learning and Experience Curves
• The marginal cost can be plotted on the graph when 20 and 10
units are produced.
• Identifying the marginal cost for each level of production, 6.1 and
8.1.
• It remains to compare them
6.1/8.1 = .753
• We would estimate that this curve is about 75% experience curve.
8. Class 1:
Learning and Experience Curves
What is the difference between the product life cycle and the process life
cycle? In what way are these concepts related?
9. Class 1:
Learning and Experience Curves
• The product life cycle is related to that sales change over time.
• Start up
• Rapid growth
• Maturation
• Stability or decline
• The process life cycle is refers to the characteristics of the manufacturing
process.
• Back and fort process low volume but steady
• More volume, cost learning effects and automatization begins
• Regular volume, standardization process
• Relationship is around the volumen, design stability , manufacturing flow,
however there is no rule between process periods and experiences.
10. Class 1:
Learning and Experience Curves
An analyst predicts that an 80 percent experience curve should be an accurate
predictor of the cost of producing a new product. Suppose that the cost of the
first unit is $1,000. What would the analyst predict is the cost of producing the
a. 100th unit?
b. 10,000th unit?
11. Class 1:
Learning and Experience Curves
The curve is the form
Y(u) = a𝒖−𝒃
a is the cost of production the first unit
b = -ln(L)/ln(2)
a = $1000 b = -ln(.80)/ln(2) = .3219
a. Y(1000) = (1000)(100).3219 = $227.09
b. Y(10,000) = (1000)(10,000).3219
= $51.57
12. Class 1:
Learning and Experience Curves
Suppose that the Mendenhall Corporation, a producer of women’s
handbags, has determined that a 73 percent experience curve accurately
describes the evolution of its production costs for a new line. If the first unit
costs $100 to produce, what should the 10,000th unit cost based on the
experience curve?
13. Class 1:
Learning and Experience Curves
The curve is the form
Y(u) = a𝒖−𝒃
a is the cost of production the first unit
b = -ln(L)/ln(2)
a = $100 b = -ln(.73)/ln(2) = .4540
Y(10,000) = (100)(10,000)−.4540
= $1.53
