Supplement I  Learning Curve Analysis

Supplement

I Learning Curve Analysis

TRUE/FALSE

1. The learning effect can be represented by a line called a learning curve.

Answer: True
Reference: The Learning Effect
Difficulty: Easy
Keywords: learning effect, learning curve

2. The first learning curve was developed by the aircraft industry.

Answer: True
Reference: The Learning Effect
Difficulty: Moderate
Keywords: learning curve

3. The simpler the product, the more pronounced the learning rate.
Answer: False
Reference: Managerial Considerations in the Use of Learning Curves
Difficulty: Moderate
Keywords: learning rate

4. Learning curves provide their greatest advantage in the early stages of new service or
product production.
Answer: True
Reference: Managerial Considerations in the Use of Learning Curves
Difficulty: Moderate
Keywords: learning curve, new service, new product

MULTIPLE CHOICE

5. Which of the following statements about learning curves is generally TRUE?

a. Management can decide to achieve a certain rate of learning.
b. Learning curves were first quantified by the U.S. Postal Service.
c. Using the “doubling” model, a learning curve with a rate of learning of 70 percent
means the tenth unit takes 70 percent of the time that the twentieth unit will take.
d. Learning curves are recognition of the concept that the time a task takes usually
decreases with experience.
Answer: d
Reference: The Learning Effect
Difficulty: Moderate
Keywords: learning curve, repetition

808
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

6. Which one of the following statements is TRUE about the relationship between learning
curves and competitive strategy?
a. Knowing where your process is on the learning curve will enable you to make
frequent product modifications.
b. Firms that emphasize low cost in their competitive strategy strive to move down the
learning curve by increasing volume.
c. Learning curves enable managers to project fixed manufacturing costs for future
production quantities.
d. Projecting the impact of learning curves into the future is one effective way of
reducing the impact of environmental uncertainty.
Answer: b
Reference: Multiple sections
Difficulty: Moderate
Keywords: learning curve, competitive strategy

7. Which one of the following is an assumption of learning curves?

a. The cumulative time of production decreases as production increases.
b. Time reduction per unit increases as cumulative production increases.
c. The same learning curve should be used when a company increases its level of
automation.
d. The reduction in time per unit follows an exponential curve.
Answer: d
Reference: Multiple sections
Difficulty: Moderate
Keywords: learning curve assumption, exponential curve

8. Which one of the following statements is NOT a typical assumption related to developing
learning curves?
a. The total direct labor hours needed to produce the first 100 units will be double the
amount of hours needed to build the first 50 units.
b. The direct labor needed per unit will decrease at a declining rate as cumulative
production increases.
c. The direct labor hours per unit will decrease according to an exponential curve as
cumulative production increases.
d. The direct labor needed to produce the 50th unit will always be more than the direct
labor needed to produce the 51st unit.
Answer: a
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve

9. The annual report for Luddite Corporation boasted of their ERP implementation and
noted that, “while there were initially some growing pains, our learning rate for this
system has been calculated at 100%.” What are the implications of this statement?
a. Luddite Corporation is twice as fast processing transactions now.
b. Luddite Corporation is twice as slow processing transactions now.
c. Luddite Corporation processes transactions at the same rate now.
d. Luddite Corporation processes transactions instantaneously (takes zero time) now.
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, rate

809
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

10. Under learning curve theory, with a learning rate of 70 percent:

a. the time to produce the second unit will be 70 percent less than the time to produce
the first unit.
b. the time to produce the second unit will be 30 percent less than the time to produce
the first unit.
c. the cumulative average time per unit after producing the first 100 units will be 70
percent less than the average time per unit of the first 50 units.
d. the average time per unit will be cut in half for every 70 units.
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve

11. Which one of the following statements about learning curves is FALSE?
a. The direct labor for the n+1st unit will always be less than the direct labor required
for the nth unit.
b. The reduction in time will follow an exponential curve.
c. A benefit of learning curves is that they are unaffected by factors such as product
complexity and the rate of capital additions.
d. The cumulative average number of direct labor hours per unit for a given product
after the tenth unit with an 80 percent learning rate will be less than that for the same
product with a 70 percent learning rate.
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, capital expenditures, product complexity

12. The first unit took 12 hours to produce and the learning rate is expected to be 85 percent.
How long will it take to produce the eighth unit?
a. Fewer than or equal to 7.0 hours
b. Greater than 7.0 hours but fewer than or equal to 7.5
c. Greater than 7.5 but fewer than or equal to 8.0
d. Greater than 8.0
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, labor requirements

13. The first unit took 10 hours to produce and the learning rate is expected to be 90 percent.
How long will it take to produce the sixteenth unit?
a. Fewer than or equal to 6.0 hours
b. Greater than 6.0 hours but fewer than or equal to 7.5
c. Greater than 7.5 but fewer than or equal to 9.0
d. Greater than 9.0
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, labor requirements

810
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

14. The first unit took 18 hours to produce and the learning rate is expected to be 80 percent.
How long will it take to produce the eighth unit?
a. Fewer than or equal to 7.0 hours
b. Greater than 7.0 hours but fewer than or equal to 8.5
c. Greater than 8.5 but fewer than or equal to 10.0
d. Greater than 10.0
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, labor requirements

15. How long will it take to make 25 units if the first one took 8 hours and there is a 90
percent learning rate? Refer to the copy of Table I.1appended to this exam.
a. Fewer than or equal to 130 hours
b. Greater than 130 hours but fewer than or equal to 140 hours
c. Greater than 140 hours but fewer than or equal to 150 hours
d. Greater than 150 hours
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate

16. The fifth unit took 10 hours to produce and the learning rate is expected to be 85 percent.
How long will it take to produce the tenth unit?
a. Fewer than or equal to 8.0 hours
b. Greater than 8.0 hours but fewer than or equal to 8.5
c. Greater than 8.5 hours but fewer than or equal to 9.0
d. Greater than 9.0
Answer: b
Reference: Developing Learning Curves
Difficulty: Easy
Keywords: learning curve, learning rate

17. The fifth unit of a long production run was produced in 15 hours. The process has an
estimated learning rate of 90 percent. What is the lowest level of output at which the
cumulative average production time per unit falls below 15 hours?
a. Fewer than or equal to 8 units
b. Greater than 8 units but fewer than or equal to 11 units
c. Greater than 11 units but fewer than or equal to 14 units
d. Greater than 14 units
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, average production time

811
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

18. How long will it take to make 25 units if the third one took 6.5 hours and there is a 90
percent learning rate? Refer to the copy of Table I.1 appended to this exam.
a. Fewer than or equal to 130 hours
b. Greater than 130 hours but fewer than or equal to 140 hours
c. Greater than 140 hours but fewer than or equal to 150 hours
d. Greater than 150 hours
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, total production time
19. The fourth unit took 10 hours to produce and the learning rate is expected to be 80
percent. How long will it take to produce the tenth unit? [Note: a calculator is required to
answer this question.]
a. Fewer than or equal to 7.0 hours
b. Greater than 7.0 hours but fewer than or equal to 8.0
c. Greater than 8.0 hours but fewer than or equal to 9.0
d. Greater than 9.0
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, labor requirements

20. The seventh unit of a long production run was produced in 3 hours. The process has an
estimated learning rate of 90 percent. At what level of output will the cumulative
production time exceed 40 hours?
a. Fewer than or equal to 8 units
b. Greater than 8 units but fewer than or equal to 10 units
c. Greater than 10 units but fewer than or equal to 12 units
d. Greater than 12 units
Answer: d
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, total production time

21. How long will it take to make units 11 through 20 if the first one took 8 hours and there
is a 90 percent learning rate? Refer to the copy of Table I.1 appended to this exam.
a. Fewer than or equal to 50 hours
b. Greater than 50 hours but fewer than or equal to 55 hours
c. Greater than 55 hours but fewer than or equal to 60 hours
d. Greater than 60 hours
Answer: b
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve

812
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

22. Suppose the average time for the first 1,000 units you have manufactured is 2.375
minutes. Your rate of learning is 90 percent, and you need to find the total time required
to manufacture the next 1,000 units. Refer to the copy of Table I.1 appended to this exam.
The total time is:
a. not more than 2,000 minutes.
b. greater than 2,000 minutes but not more than 2,700 minutes.
c. greater than 2,700 minutes but not more than 3,300 minutes.
d. greater than 3,300 minutes.
Answer: a
Reference: Developing Learning Curves
Difficulty: Hard
Keywords: learning curve, total time required

23. Given that the third unit took 100 minutes and the rate of learning is 80 percent, how
much time will it take to build unit 96?
a. Fewer than or equal to 30 minutes
b. Greater than 30 minutes but fewer than or equal to 35 minutes
c. Greater than 35 minutes but fewer than or equal to 40 minutes
d. Greater than 40 minutes
Answer: b
Reference: Developing Learning Curves
Difficulty: Hard
Keywords: learning curve, time required

24. It took 100 hours to produce the first unit and 95 hours to produce the second unit. How
many hours are required to produce the eighth unit? [Note: a calculator is required to
answer this question.]
a. Fewer than or equal to 60 hours
b. Greater than 60 hours but fewer than or equal to 75 hours
c. Greater than 75 hours but fewer than or equal to 90 hours
d. Greater than 90 hours
Answer: c
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, time required

25. It took 100 hours to produce the first unit and the learning rate is 80 percent. How much
time will it take to produce units 16 through 20? Refer to the copy of Table I.1 appended
to this exam.
a. Fewer than or equal to 160 hours
b. Greater than 160 but fewer than or equal to 170 hours
c. Greater than 170 but fewer than or equal to 180 hours
d. Greater than 180 hours
Answer: d
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, time required

813
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

26. Given that the fifth unit took 10 hours to build and the learning rate is 90 percent, how
much time will it take to build units 11 through 15? Refer to the copy of Table I.1
appended to this exam.
a. Fewer than or equal to 38 hours
b. Greater than 38 hours but fewer than or equal to 40 hours
c. Greater than 40 hours but fewer than or equal to 42 hours
d. Greater than 42 hours
Answer: d
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, time required

27. A company is introducing a new product. The first unit took 1,000 hours to complete, and
the fourth unit took 750 hours to complete. What is the rate of learning for this product?
a. Less than 40 percent
b. Greater than or equal to 40 percent but less than 60 percent
c. Greater than or equal to 60 percent but less than 80 percent
d. Greater than 80 percent
Answer: d
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate

Case G.1
The production schedule for a new product follows.

The first unit took 100 hours to complete, and the rate of learning is 80 percent. Each
employee works 40 hours per month. Refer to the copy of Table I.1 appended to this exam.

28. Using the information in Case G.1, how much time will it take to produce the units in
month 1?
a. Fewer than 800 hours
b. Greater than or equal to 800 hours but fewer than 1,100 hours
c. Greater than or equal to 1100 hours but fewer than 1,500 hours
d. Greater than 1,500 hours
Answer: b
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curve, time required

814
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

29. Using the information in Case G.1, what is the minimum number of employees needed in
month 3?
a. Fewer than 20 employees
b. Greater than or equal to 20 employees but fewer than 30 employees
c. Greater than or equal to 30 employees but fewer than 40 employees
d. Greater than 40 employees
Answer: b
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curve, employees required

30. The production for a new product follows:

The first unit will take 2,000 hours to produce and the learning rate is 90 percent.
Currently, the company employs 40 workers, who each work 200 hours regular time per
month. In which months will overtime be needed for the production schedule shown?
Refer to the copy of Table I.1 appended to this exam.
a. Month 4 only
b. Months 3 and 4 only
c. Months 1 and 2 only
d. Month 1 only
Answer: b
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curve, overtime

31. As the cumulative number of units produced becomes large:

a. the learning effect is more noticeable.
b. the learning effect increases.
c. the learning effect is less noticeable.
d. the learning effect decreases.
Answer: c
Reference: Managerial Considerations in the Use of Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning effect

815
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

32. Which statement regarding the effect of automating some of the direct labor in a process is
best?
a. The overall learning rate should be unaffected.
b. The overall learning rate will probably decrease.
c. The overall learning rate will probably increase.
d. The learning rate for the automated portion of the process should be higher than the
learning rate for the portion that is not automated.
Answer: b
Reference: Managerial Considerations in the Use of Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate, automation

FILL IN THE BLANK

33. The mathematical model that is used to generate a learning curve is ____________.
Answer: logarithmic
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, logarithm

34. The learning rate depends on factors such as ____________ and ____________.
Answer: complexity; rate of capital addition, automation
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning rate, complexity, rate of capital, automation

SHORT ANSWERS

35. What are the three major assumptions of the learning curve?
Answer: (1) Direct labor required for the n+1st unit will always be less than that required
for the nth unit. (2) Direct labor requirements will decrease at a declining rate as
cumulative production increases. (3) Reductions in time will follow an exponential curve.
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, assumptions

36. How are learning curves useful in financial planning?

Answer: Learning curves help the financial planner determine the amount of cash needed
to finance operations and provide a basis for comparing prices and costs. They can be
used to help determine a contract price by identifying the average direct labor cost per
unit.
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curves, financial planning

816
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

37. For a company that produces hand held calculators, the Operations Manager knows that
in the early stages of production for a new product, the expenditures exceed receipts,
whereas in the latter stages, the reverse is true. Give an explanation for this phenomenon.
Answer: The learning curve theory states that the direct labor costs will exceed the
average in the early stages of production, whereas the reverse is true in the latter stages.
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curves, direct labor
38. When production time standards are being developed for a brand new process for several
of the hand assembly components of the production line, what are the implications of
learning effects on the time standards and the line balance? What could be done to
address this situation?
Answer: Learning curve theory states that the labor requirement will be greater in the
early stages of production and lower as workers complete several repetitions of their jobs.
A line balance that is performed using inflated times will have increased idle time and
decreased efficiency as learning effects occur. Learning effects can be compensated for
by applying a smaller performance rating factor or allowance factor. If management is
unsure of the workers’ learning rate, the line can be balanced, and then a second study
performed to rebalance it.
Reference: Using Learning Curves
Difficulty: Moderate
Keywords: learning curves, labor output rate, time standard, line balance
39. Why is the learning rate more pronounced for complex products than for simple
products?
Answer: Complex products offer more opportunity for improving work methods,
materials, and processes.
Reference: Managerial Consideration in the Use of Learning Curves
Difficulty: Moderate
Keywords: learning rate, product complexity

PROBLEMS

40. A contractor is preparing a bid to install swimming pools at a new housing addition. The
estimated time to build the first pool is 35 hours. The contractor estimates a 90 percent
learning rate; what is the estimated time to install all 30 pools? Refer to the copy of Table
I.1 appended to this exam.

Answer:
Using Table I.1, the coefficient for a 90 percent learning rate with n=30 is 0.6909.
The time for all 30 pools would be
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning, rate, curve

817
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

41. The estimated time to produce the first unit is 100 hours. If a 90 percent learning rate is
applicable, what is the estimated time of producing the first ten units? Refer to the copy
of Table I.1 appended to this exam.
Answer:
Learning rate 90.0%

Time for first unit 100

Unit number 10
Time for unit 10 70.47
Cumulative average time per unit 79.94
Reference: Developing Learning Curves
Difficulty: Moderate
Keywords: learning curve, learning rate

42. Two contract labor companies are competing for work being outsourced by Febrero SpA.
One contractor, Terza, has a learning rate governed by a tripling of output at a 90% rate
and the other contractor, Segundo, has a learning rate governed by the conventional
doubling of output at a 90% rate. Both Terza and Segundo take 20 minutes to complete
the first unit they are given for bid estimation purposes. How many more units must
Terza make than Segundo before their time per unit drops below 15 minutes? [Note: a
calculator is required to answer this question.]
Answer:

Depending on rounding, students will determine that the 20 th or 21st unit will do the trick
for Terza, a difference of about 14 units.
Reference: Developing Learning Curves
Difficulty: Hard
Keywords: learning curve, learning rate

818
Copyright ©2010 Pearson Education
Supplement I  Learning Curve Analysis

TABLE I.1
Conversion Factors for the Cumulative Average Number
of Direct Labor Hours per Unit

80% Learning Rate 90% Learning Rate

(n = cumulative production) (n = cumulative production)
n n n n n n
1 1.00000 19 0.53718 37 0.43976 1 1.00000 19 0.73545 37 0.67091
2 0.90000 20 0.52425 38 0.43634 2 0.95000 20 0.73039 38 0.66839
3 0.83403 21 0.51715 39 0.43304 3 0.91540 21 0.72559 39 0.66595
4 0.78553 22 0.51045 40 0.42984 4 0.88905 22 0.72102 40 0.66357
5 0.74755 23 0.50410 64 0.37382 5 0.86784 23 0.71666 64 0.62043
6 0.71657 24 0.49808 128 0.30269 6 0.85013 24 0.71251 128 0.56069
7 0.69056 25 0.49234 256 0.24405 7 0.83496 25 0.70853 256 0.50586
8 0.66824 26 0.48688 512 0.19622 8 0.82172 26 0.70472 512 0.45594
9 0.64876 27 0.48167 600 0.18661 9 0.80998 27 0.70106 600 0.44519
10 0.63154 28 0.47668 700 0.17771 10 0.79945 28 0.69754 700 0.43496
11 0.61613 29 0.47191 800 0.17034 11 0.78991 29 0.69416 800 0.42629
12 0.60224 30 0.46733 900 0.16408 12 0.78120 30 0.69090 900 0.41878
13 0.58960 31 0.46293 1,000 0.15867 13 0.77320 31 0.68775 1,000 0.41217
14 0.57802 32 0.45871 1,200 0.14972 14 0.76580 32 0.67471 1,200 0.40097
15 0.56737 33 0.45464 1,400 0.14254 15 0.75891 33 0.68177 1,400 0.39173
16 0.55751 34 0.45072 1,600 0.13660 16 0.75249 34 0.67893 1,600 0.38390
17 0.54834 35 0.44694 1,800 0.13155 17 0.74646 35 0.67617 1,800 0.37711
18 0.53979 36 0.44329 2,000 0.12720 18 0.74080 36 0.67350 2,000 0.37114

819
Copyright ©2010 Pearson Education