134
Miscellaneous
Learning Curve for Manufacturing Costs
Many production process costs vary with output according to the "learning curve"
equation. The production team becomes more proficient in manufacturing a given item as
more and more of them are fabricated and costs may be expected to decrease by a
predictable amount. The learning factor, r, characterizes the learning curve. For instance,
if r =.80 the curve is called an 80% learning curve.
It is readily apparent that the learning, or experience curve, has many uses in setting
production standards, forecasting costs, setting prices, etc. Note, however, that the
learning factor may change, especially after large numbers have been produced.
It the cost of the first unit of a run, C
1
, and the learning curve factor, r, are known, the
following procedure can be used to calculate the cost of the nth item:
1.
Key in the cost of the first item, C
1
and press \(³).
2.
Key in the number of units produced, n, and press
\(³).
RPN Mode:
3.
Key in the learning factor, r, and press
g°2g°z.
4.
Then press
q§ to calculate the cost of the nth unit, Cn.
ALG Mode:
3.
Key in the learning factor, r, and press
g°z2g°q.
4.
Then press
~~§~³to calculate the cost of the nth unit, Cn.
Example 1:
An electronic manufacturer begins a pilot run on a new instrument. From
past experience he expects the process to have a learning factor, r, or 0.90. If the first unit
costs $875 to produce, what is the expected cost of the 100th unit?
12c platinum / 12C
RPN Keystrokes
12c platinum
ALG Keystrokes
Display Comments
875\ 875³
875.00
100\ 100³
100.00
.9g°2g°z .9g°z2g°q
-0.15
q§ ~~§~³
434.51
Cost of the 100th unit.
If the cost of the first unit, C
1
, and the nth unit, C
n
, are known the learning factor may be
calculated. In addition, it is possible to calculate C
ij
, the average cost of the ith thru jth
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