Cost Drivers Learning Event, 2nd November 2005

Learning Curves Some Alternative Approaches

Alan R Jones, BAE Systems

O! This Learning, what a thing it is.

William Shakespeare (c.1594, The Taming of The Shrew)

The material presented here is based on a case study presented in the following publication:
Jones, A.R. Case Study - Applying Learning Curves in Aircraft Production - Procedures and Experiences in Zandin, K (editor) Maynards
Industrial Engineering Handbook, 5th Edition, McGraw-Hill, New York, 2001
2005 BAE Systems

Cost Drivers Learning Event, 2nd November 2005

Learning Curves An Alternative Approach

Constituent Elements of Production Learning

Segmentation Theory

Applications

Effect of Output Rate Constraint

End of Line Effect
Assessing Loss of Learning
Multi-Ganging of Operations (Parallel Learning)

Cumulative and Cumulative Average Data

Formulae
Examples
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Cost Drivers Learning Event, 2nd November 2005

Background

Constituent Elements of Production Learning

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Cost Drivers Learning Event, 2nd November 2005

Constituent Elements of Production Learning

Tooling Improvements
34%

Manufacturing Cost
Improvements
Quality Control

23%
4%
6%
22%

11%

Manufacturing Control
Operator Learning
Engineering Changes to
Assist Production

Source: P Jefferson, Productivity Comparisons with the USA where do we differ? Aeronautical Journal, Vol 85 No844 May 1981, p.179
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Cost Drivers Learning Event, 2nd November 2005

Segmenting the Learning Curve: Mathematical Model

Consider 4 cost driver components with values , , , and
where + + + = 1 (or 100%)
Equation of a Unit Learning Curve:
TA = T1 A
where is the learning exponent: = log(p)/log(2)
with p = the learning percentage expressed as a decimal
and TA is the time at Unit A
Expand the exponent:

TA = T1 A( + + + )
TA = T1 A A A A

In order to model data with breakpoints, re-define the variable A:

TA = T1 A1 A2 A3 A4
For the primary learning (where all cost drivers are active), the values of A1 A2 A3 and A4 are all
equal
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Cost Drivers Learning Event, 2nd November 2005

Segmenting the Learning Curve: Mathematical Model

All cost drivers active.

Example based on a production run

of 60learning
units points
Relative

Impact of design
freeze truncates
relative learning
for this cost
driver
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Build No

Design

are all equal

Operator

Tooling

Logistics

A1

A2

A3

A4

10

10

10

10

45

10

45

45

60

10

45

45

Impact of
constant output
rate truncates
relative learning
for this cost
driver
End of Line
truncates relative
learning for these
cost drivers

Cost Drivers Learning Event, 2nd November 2005

Learning Curve Segmentation: Points to Consider

Benefits of Approach:

Allows discontinuities to be modelled easily (using an on/off switch

approach)
Allows scenarios to be modelled which assume learning rates greater than
or less than the norm for a particular process or product type
Allows multiple linear regression techniques to be applied in cost data
analysis

Words of Caution:

As with all modelling techniques, the approach requires calibration for the
specific environment in which it is to be applied
There should be a logical model or explanation of why particular cost
drivers have been switched in or out

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Cost Drivers Learning Event, 2nd November 2005

Application Example

Effect of Output Rate Constraint on Learning

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Cost Drivers Learning Event, 2nd November 2005

Effect of Output Rate Constraint on Learning

Average
Contents

Number of Operators

Average Hours Worked

in Time Period

Constant

Constant

Every operator
performs same task
on every unit

Constrained by working
hour practices (basic
working week &
sustainable overtime

(For Optimum
Learning)

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(Effective Upper
& Lower Limits)

Average Hours spent

per Unit in Time Period

Reducing

(Learning Curve)

Number of Units
produced in Time Period

Increasing
(Rate Ramp-up)

The Reduced Cost : Increased Output is in

part a natural response of increased product
familiarity, and in part a response to market
expectations of affordability etc

Cost Drivers Learning Event, 2nd November 2005

Effect of Output Rate Constraint on Learning

Average
Contents

Number of Operators

Average Hours Worked

in Time Period

Average Hours spent

per Unit in Time Period

Number of Units
produced in Time Period

Reducing

Constant
(Effective Upper
& Lower Limits)

(Learning Curve)

(Fixed Output Rate)

Reducing the number

of operators violates
the premise for
optimum learning

Constrained by working
hour practices (basic
working week &
sustainable overtime

A response to market
expectations of
affordability etc to
drive down costs

Customer contractual
limitation or
constraint

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Reducing

Constant

Cost Drivers Learning Event, 2nd November 2005

Example 1: Cumulative Deliveries of Product A

350

Delivery Rate
Build-up

Constant Rate
Deliveries

300

Cumulative Units

250

200
9.75 per month

150
117

100

50

Years
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Cost Drivers Learning Event, 2nd November 2005

Example 2: Assembly Learning for Product A

Delivery Rate
Build-up

Constant Rate
Deliveries

Man-hours

80.4% Learning
after the breakpoint
75.7% Learning
up to the breakpoint
Swingometer
22%

Breakpoint
@ 117

10

Actual
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Regression

Cumulative Units
5% Confidence Level

100

78%

1000

95% Confidence Level

Cost Drivers Learning Event, 2nd November 2005

Example 2: Cumulative Deliveries of Product B

250

Delivery Rate
Build-up

Constant Rate
Deliveries

Cumulative Units

200

150

4 per month

100

60

50

Years
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Cost Drivers Learning Event, 2nd November 2005

Example 2: Assembly Learning for Product B

Constant Rate
Deliveries

Man-hours

Delivery Rate
Build-up

87.8% Learning
after the breakpoint
Swingometer

72.1% Learning
up to the breakpoint

40%

60%

Breakpoint
@ 60

10

Actual
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Regression

Cumulative Units
5% Confidence Level

100

1000

95% Confidence Level

Cost Drivers Learning Event, 2nd November 2005

Effect of Output Rate Constraint on Learning

Other factors affecting the analysis:

The examples emanate from different factories with different

management styles and cultural heritage
One product was essentially for a single customer variant/mark initially
followed by small batch export orders
The other product was a multiple variant/mark international collaboration
The level of continued investment was geared around the known and
perceived market opportunities
The level and timing of engineering change required to introduce export
variants and support customer modifications has to be considered
The underlying manufacturing technology used on the two products was
similar but not identical

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Cost Drivers Learning Event, 2nd November 2005

Application Example

End of Line Effect on Learning Curves

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Cost Drivers Learning Event, 2nd November 2005

End of Line Effect on Learning Curves

Premise:
To enable ongoing learning curve reduction once a constant rate of
output is achieved requires investment in new or improved technology,
process or logistics etc
Reduced quantity remaining over which investment can be recovered
100

Cumulative Return on Investment

90

Reduced
saving
per unit

80
70
60
50
40
30
1

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10

11

12

Diminishing
Return on
Investment

Cost Drivers Learning Event, 2nd November 2005

End of Line Effect on Learning Curves

Factor (Cumulative Return on Investment)

1000
Learning Rate
75%
80%
85%
90%

100

Diminishing Cumulative Return on Investment =

(Unit Learning Curve Reduction) x (Units Remaining)

10
75%
80%
85%
90%

Quantity

0.1

0.01
Quantity

0.001
1
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10

It would seem that there is a case

that a learning curve will truncate
naturally somewhere between the 60%
to 80% point of the total envisaged
production quantity, regardless of the
learning curve rate?

Cumulative Units

100

1000

Cost Drivers Learning Event, 2nd November 2005

End of Line Effect on Learning Curves

Factor (Cumulative Return on Investment)

100000

The empirical relationship of the End of Line

Effect on a learning curve can be attributed to
the Law of Diminishing Returns.
It is not unreasonable to expect that a
learning curve will truncate naturally
somewhere between the 60% to 80% point of
the total envisaged production quantity.
10000

Quantity

Example:
Constant rate of output at unit 50
400 units planned in total
75% Learning Curve
1000
1

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10

Breakpoint
@ Constant Rate

Cumulative Units

100

1000

Cost Drivers Learning Event, 2nd November 2005

Application Example

Assessing Loss of Learning

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Cost Drivers Learning Event, 2nd November 2005

Assessing Loss of Learning: Anderlohr Method

Consider a Break in Production
of 12 months after 50 units

Man-hours

3.
4.

1.
2.

Determine how many units have been

produced in the previous 12 months
Back track up the learning curve by
this quantity

10

Cumulative Units

100

Source: Anderlohr, G., What production breaks cost, Journal of Industrial Engineering,
September 1969, pp.34-36
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This defines the re-start

position for learning
Repeat the learning
process (offset by the
number of units lost)

1000

Basic

Anderlohr

Cost Drivers Learning Event, 2nd November 2005

Assessing Loss of Learning: Segmentation Method

Consider a Break in Production
of 12 months after 50 units

Continued Component of Learning

3.
le
mp
a
Ex

Man-hours

69%

4.

31%

Component subject to Re-Learning

1.
2.

Determine the proportion of learning

that will continue by considering the
cost drivers that might be affected
This defines the re-start position for
learning after the break

10

Basic
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After the break the

continued learning
component still applies
Factor this by the
re-learning component
(offset by the number
of units lost)

Cumulative Units
With Re-learning

100

Continued Learning

1000

Cost Drivers Learning Event, 2nd November 2005

Assessing Loss of Learning: Comparison of Methods

Man-hours

Consider a Break in Production

of 12 months after 50 units

Anderlohr Method

Anderlohr method always lags

the segmentation method for
the same re-start value

10

Basic
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Cumulative Units
Anderlohr

Segmentation Method

100

Segmentation

1000

Cost Drivers Learning Event, 2nd November 2005

Assessing Loss of Learning: Comparison of Methods

Practical Considerations:

Small breaks in production will be more difficult to detect further down

the curve due to potential noise in the actual data
The Anderlohr Method assumes that the rate of learning loss is equivalent
to the rate of learning gain. This is not necessarily the case, but a
modified approach which backtracks only a proportion of the lost
learning could be adopted
What happens when the break in production occurs during the latter
stages of the production run (often the case)? The learning curve may
have bottomed out by this stage
Either approach could be applied to other cases of learning loss other than
time breaks; for example, a physical relocation or new start-up.

Consider the following example using the cost driver segmentation method
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Example 3: Cumulative Deliveries of Product C

3-Year Break
In Production

1000
980
960

Cumulative Units

940

2 per month
@ peak

2 per month
@ end of line

920
900
880
860
840
820
800

Years
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Cost Drivers Learning Event, 2nd November 2005

Example 3: Assembly Learning for Product C

Rate restricted learning

Man-hours

Re-learning

Swingometer

Swingometer

22%

29%

78%

700

750

800

850

Cumulative Units
Actual

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71%

Break in Production

Regression

900

950

1000

Cost Drivers Learning Event, 2nd November 2005

Application Example

Multi-Ganging of Operations: Parallel Learning

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Cost Drivers Learning Event, 2nd November 2005

Multi-Ganging of Operations: Parallel Learning

Man-hours

Multi-Gang parallel working

has the effect of deferring
learning curve reduction by
a proportion of the lost
operator contribution

This has the apparent

effect of reducing the
observed learning and
increasing the theoretical
First Unit Value
1

10

Cumulative Units
Common Learning

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100

Series Working

2-Gangs

4-Gangs

8-Gangs

Cost Drivers Learning Event, 2nd November 2005

Alternative Approaches

Cumulative and Cumulative Average Data

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Cost Drivers Learning Event, 2nd November 2005

Cumulative Average Data

Cumulative Average Model:

The formula for the Cumulative Average version of a Learning Curve is the
same as that for a Unit Learning Curve:
TA = T1 A
where is the learning exponent: = log(p)/log(2)
with p = the learning percentage expressed as a decimal
and TA is the Cumulative Average Time at Unit A

The Cumulative Average version will be inherently smoother than its Unit
counterpart, but the rate of learning indicated will be very similar for
higher quantities (greater than 30 depending on the accuracy required)

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Cost Drivers Learning Event, 2nd November 2005

Man-hours

Cumulative Average Data

Cumulative Average Curve

runs parallel to the Unit
Curve for larger quantities

10

Unit
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Cumulative Units
Unit Cum Ave

100

Unit Regression

1000

Cost Drivers Learning Event, 2nd November 2005

Cumulative Data Approximation Formulae

Cumulative Data Approximations for a Unit Learning Curve:
For a positive error1,

CA

T1 [ (A + 0.5)+1 - 0.5+1 ]
( + 1)

For a negative error2,

CA

T1 (A+1 - 1) + T1 (A + 1)
( + 1)

where is the learning exponent: = log(p)/log(2)

with p = the learning percentage expressed as a decimal
Source:
1.
Conway, R.W. and Schultz, A.Jr., The Manufacturing Progress Function, Journal of Industrial Engineering, Jan-Feb 1959, pp.39-54
2.
Jones, A.R. Case Study - Applying Learning Curves in Aircraft Production - Procedures and Experiences in Zandin, K (editor)
Maynards Industrial Engineering Handbook, 5th Edition, McGraw-Hill, New York, 2001
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Cost Drivers Learning Event, 2nd November 2005

Cumulative Data Approximation Formulae Error

2.50%
2.00%
1.50%

% Error

Cauchy-Schwartz Approximation

80% learning curve

1.00%
0.50%
0.00%
-0.50%

75% learning curve

-1.00%

Jones Approximation

-1.50%
-2.00%
-2.50%
0

10

20

30

40

50

60

70

80

90

100

Cumulative Units

Source: Jones, A.R. Case Study - Applying Learning Curves in Aircraft Production - Procedures and Experiences in Zandin, K (editor)
Maynards Industrial Engineering Handbook, 5th Edition, McGraw-Hill, New York, 2001
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Cost Drivers Learning Event, 2nd November 2005

Cumulative Data Equivalent Unit Completion Method

Cumulative Units

60
50
40
30
20
10
0

Calendar Time

Cumulative Average

Man-hours

Cumulative Average based on

Equivalent Unit Completions
Unit Learning Curve

0.1

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Cumulative Units

10

100