Galorath Incorporated 2002

All About Learning Curves

Evin Stump P.E.
SCEA Conference 2002

This Presentation vs. the Paper
Due to limitations of time, this presentation
can only scratch the surface of the
information provided in the paper on which
it is based
The paper develops 22 useful learning
curve equations, has 41 fully worked
examples, and illustrates about a dozen
useful learning curve methodologies
Background-1
Learning effect first noted by T.P. Wright
in 1936; he created a learning curve
math model
Used to estimate aircraft production labor in WW II,
and since then to estimate many kinds of repeated
activities
First example of true parametric estimating??
Basic idea:
As people repeat a task again and again, the time
it takes to do the task gradually decreases due to
learning
Rate of learning is greatest at first when
ignorance is greatest; rate of learning decreases
as ignorance decreases
Background-2
At first, learning was attributed to
increased motor skills in the workers as
they repeated their tasks
Later it was realized that management also could
contribute to learning with better tools and
processes
This led to new names being applied to the curves,
e.g., improvement, progress, startup, efficiency,
etc.
In this presentation we will stick with the
original name: learning curves
(management can learn too)
Critically Important
in Industrial Cost Analysis
The learning effect can lead to very large
reductions in cost as production
progresses
Finding ways to make learning faster can
result in a huge competitive advantage
Starting production ahead of your competitors
Finding better processes and being faster to
implement them
Butany proposal to improve the learning rate usually
involves an investment
The cost of the investment should be traded off against
the savings caused by faster learning
Some Industrial Uses
Manufacturing labor of
a repeated product
Construction
(repeated structures
like spans of a bridge
or tract houses)
Creation of documents
(e.g., engineering
specs and drawings,
manuals)
Boring of tunnels
Drilling of wells
Upgrades of existing
products
Purchase or raw
materials (improved
yield, decreased
scrap)
Component
procurement
(suppliers have
learning, too)
Negotiations
Not Useful when
production is sporadic
Random overhauls
Small lot job shops
work is fully automated and there is no
way to improve the production rate
rules & regulations limit the production
rate
production quantities are very small
each item produced is significantly
different from the preceding item (custom
products)
Popular Models
Many learning models proposed, but only
two in common use
Wrights original model, called the unit (U) model
A later model due to Crawford called the
cumulative average (CA) model
FAQ: which is best?
Properly used, roughly equal in accuracy
Main difference is in difficulty of the math, but
computers make this difference almost trivial
Which one has the most difficult math depends on what
you are doing
For simple estimating, the CA model is easiest to use
Underlying Power Law
y = ax
b
The two models differ
in their interpretation
of y (next chart)
a always represents
the theoretical labor
hours required to build
the first unit produced
(a positive number)
x always represents
the number (count) of
an item in the
production sequence
(unit #1, #2, #3, etc.)
b is called the
natural slopeit
represents the rate
of learning [always
a negative number
except for (rare)
forgetting]
The power law formula is
the basis of both models
Interpretation of y
Unit (U) model
y is the labor hours
required to build unit
#x
Because of negative
b, y decreases as x
increases
This decrease
represents the
learning effect
Cumulative
average (CA)
model
y is the average labor
hours per unit
required to build the
first x units
Because of negative
b, y decreases as x
increases
This decrease
represents the
learning effect
Power Law Plots
In log-log coordinates, a learning curve
plots as a straight line
This is usually the best way to plot one because it
is easier to read
The plot below is of the power law y = 100x
-0.25
Power Law Plot Example
1
10
100
1 10 100 1000 10000 100000
x
y
Notation for the U Model
A helpful notation for the U model is:
H
n
= H
1
n
b
Hours to
build unit #n
Hours to
build unit #1
Unit
number
Natural
slope
Note: the notation T
1
is commonly used for what is here
designated H
1
. In the paper, T is reserved for total hours.
Notation for the CA Model
A helpful notation for the CA model is:
A
n
= H
1
n
b
Average
hours per
unit to build
the first n
units
Hours to
build unit #1
Unit
number
Natural
slope
Natural vs. Percentage Slope
Learning curve calculations generally (but
not always) require a value for b
b is typically a negative number between 0 and 1
b is a mathematically appropriate but non-intuitive
number for describing slope
For convenience, analysts universally use (in
conversations as opposed to calculations) another
expression called percentage slope, where slope
is a number between 0 and 100 (except that if
forgetting occurs, percentage slope can exceed
100)
We use S as a symbol for percentage slope
Relationship Between S and b
Relationship between S and b is defined
as:
Although these relationships appear a bit
unfriendly, there is at least one good
reason for them (as you will soon see)
b = log(S/100)/log(2)
(logarithms to any base)
S =10
b log(2)+2
(logarithm to base 10)
The basic
relationship:
Solving for
S yields:
Understanding S
In industry, S typically ranges from 70% to
100%
Its counterintuitive, but 100% does not
mean furiously rapid learningit means no
learning at all (dont blame me, I didnt do
it!)
The highest rate of learning achieved in
most industrial situations is about 70%
A later chart will show some typical
percentage values realized in practice
Nifty Results
Nifty results of the relationships defined
on the previous chart (see paper for proof):
U Model: If the slope is S%, any doubling of the
production quantity from some unit #n to another unit #2n
results in a reduction in labor hours from H
n
to S% of H
n
.
CA Model: If the slope is S%, the average hours for units
1 through 2n are S% of the average hours for units 1
through n.
Math Form of Nifty Results
Nifty results on the previous chart can be
expressed mathematically as follows:
H
2n
/H
n
= S/100
U Model
A
2n
/A
n
= S/100
CA Model
These relationships are very useful in fitting learning
curves to unit historical production data.
What You Can Do with Learning Curves
Subsequent charts will illustrate important
considerations in using learning curves
and valuable uses of learning curve
relationships
Due to limitations of time, these cannot be
fully explored in this presentation, but all
are explored in detail in the paper
All illustrated uses can be done with either
the U or the CA model, as is demonstrated
in the paper
Areas We Will Review Here
We will look briefly at each of the following
areas that are discussed in detail in the
paper (the paper looks at a few more)
Lore of the slope
Error analysis
What you can estimate
Interruption of production
Fitting learning curves to production data
Tradeoff analysis with learning curves
Lore of the Slope-1
Fit learning curves to historical data when
available
This is usually the best source, but not always
Guidelines for use when historical data are
not available:
Operations that are fully automated tend to have
slopes of 100%, or a value very close to that (no
learning can happen).
Operations that are entirely manual tend to have
slopes in the vicinity of 70% (maximum learning
can happen). (cont.)
Lore of the Slope-2
Guidelines (cont.)
If an operation is 75% manual and 25%
automated, slopes in the vicinity of 80% are
common.
If it is 50% manual and 50% automated, expect
about 85%.
If it is 25% manual and 75% automated, expect
about 90%.
The average slope for the aircraft industry is about
85%. But there are departments in a typical
aircraft factory that may depart substantially from
that value.
Shipbuilding slopes tend to run between 80 and
85%.
Manufacturing Activity

Typical Slope %

Electronics

90-95

Machining

90-95

Electrical

75-85

Welding

88-92

Lore of the Slope-3
Guidelines (cont.)
The following typical values assume
repetitive operations. They are not valid if
operations are sporadic, as in a job shop
environment.

Lore of the Slope-4
Guidelines (cont.)
A slope of 93-96% is often applied to raw
materials, based on increasing procurement
efficiencies, higher yields, and lower scrap rates as
manufacturing progresses.
A slope in the 80s is typical for purchased parts,
with 85% a reasonable average value.

Lore of the Slope-5
Guidelines (cont.)
When very large quantities will be built, slopes tend
to flatten, because manufacturing planners depend
on economies of scale to build better tooling and
use more automation.
The flattening of slopes for large quantities is
typically accompanied by a reduction in first unit
hours. This effect has been used to estimate the
amount that can be spent on automation. The
answer sometimes comes out in favor of
automation, but that is not always the case.
Lore of the Slope-6
Guidelines (cont.)
Slopes tend to be flatter if a project is closely
similar to a previous project, the time gap between
them is not too large, and many of the same
people will be involved. This is sometimes called
the heritage effect.
Experienced crews tend to have lower first unit
costs than inexperienced crews, and since they are
already knowledgeable, their learning rate tends to
be less. Inexperienced crews tend to have higher
first unit costs, and higher learning rates.
For more lore of the slope, see the paper
Error Analysis-1
Most common learning curve analysis
errors
Choosing wrong value of H
1
Choosing wrong value of S (with resultant wrong
value of b)
H
1
is always a simple multiplier
The percentage error in the hours estimate is the
same as the percentage error in H
1
b is an exponent; it can create a much larger %
error in hours than the % error in b, especially at
large production quantities
Error Analysis-2
It can be shown (see paper) that the hours
estimate error due to a one percentage
point error in S is given approximately by
the following curve:
Example: if you
choose S=90% when
you should have
chosen S=91%, and
your production
quantity is 1,000, your
hours estimate will be
about 12% too low (R-
1 in plot)
R Versus N
1.00
1.05
1.10
1.15
1.20
1.25
1 10 100 1000 10000 100000
N
R
Curve valid for both U and CA models
What You Can Estimate-1
The quantities listed here can all be
estimated with either the U or the CA
model
They assume the slope is known or can be
determined
What You Can Estimate-2
Quantities you can estimate
Labor hours for any unit given hours for any other
unit
Labor hours for any contiguous block of units given
the hours for any single unit
Labor costs given labor hours and a labor rate
Material costs if they follow a learning curve
What You Can Estimate-3
Quantities you can estimate (cont.)
Labor profiles given a production scenario
Effects of breaks in production
Trading off design and production alternatives
Interruption of Production-1
Production is interrupted for many reasons
When this happens, learning can be lost
The learning curve that was being followed
is no longer validwhat to do?
An answer has been provided by George
Andelohr, an industrial engineer
His structured process provides a realistic
basis for negotiations about the cost of
interruption
Interruption of Production-2
Andelohr hypothesizes five components of
learning that can be differently affected by
various interruption scenariosthey are:
Personnel learning
Supervisory learning
Continuity of production
Methods
Special tooling
Interruption of Production-3
Each of these components is assigned a
weight, and a loss of learning in hours is
computed based on both objective fact
and subjective opinion
The lost hours are added to the first unit
after the interruption, and the learning is
backed up the curve to the unit that had
that number of hours
Production follows the new curve thus
defined
Interruption of Production-4
Here is a typical result from an Andelohr
analysis:
Example Plot of Interrupted
Learning
1000
10000
1 10 100
Units Produced
H
o
u
r
s
Production break
Learning starts again at unit determined by
amount of learning lost
Fitting Learning Curves to Production Data-1
If previous production data are available it
is often the best source for learning slope
for future projects
Two types of data are encountered in
practice
Unit data
Block data
Either a U or a CA model can be fitted to
either type of data
Fitting Learning Curves to Production Data-2
Typical unit data
Unit

Hours

1

200

2

185

3

176

4

165

5

150

Etc.



Fitting Learning Curves to Production Data-3
Typical block data
Units

Hours

1-50

55,260

51-150

98,320

151-200

37,360

Fitting Learning Curves to Production Data-4
Unit data is best but not always available
A simple technique for unit data that works
for both U and CA models is looking at
doublings of productions quantity, and
averaging
This technique relies on two equations
previously shown (see paper for details):
H
2n
/H
n
= S/100
U Model
A
2n
/A
n
= S/100
CA Model
Fitting Learning Curves to Production Data-5
A learning curve cannot be fitted to one
block of datathere must be at least two
Fits for only two blocks are relatively
simple, using derived formulas for total
hours (see paper)
Fits for three or more blocks generally
employ regression analysis
A special technique is demonstrated in the paper
for the fitting the U model to three or more
production blockstoo complex to describe here
Tradeoff Analysis with Learning Curves-1
Tradeoff analysis is a powerful way to use
learning curves, probably not used as
much as it should be
An obvious application is to trade off
manufacturing methods and materials
Different methods may have significantly different
first unit costs and learning slopesother aspects
may be different as well, such as labor rates
Casting vs. machining
Aluminum vs. composites
Make vs. buy
Tradeoff Analysis with Learning Curves-2
More sophisticated tradeoffs involving
learning curves
Target cost
Time to market
Labor skill mix
Introduction of product changes
All of these can be done using formulas
from the paper
Summary
Background
Importance & uses
Models (U & CA)
Power law
Typical slopes
Error analysis
Things you can estimate
Interruption of production
Fitting to production data
Tradeoffs using learning curves
Evin J. Stump
Galorath Incorporated
310-414-3222 x628
estump@galorath.com