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1B Learning curve

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  • 1.  1B Learning curve

    Posted 15 days ago
    Hi everyone,

    Could anyone help me explain the concept of the learning curve on the following question please?

    Question
    A has developed new manufacture of a complex part. The production of the first unit requires 10,000 direct labor hours. If an 80% learning curve is used, the cumulative direct labor hours required for producing a total of eight units would be

    My Answer
    The concept of learning says that when the output doubles, the average time will decrease from the previous level based on a constant percentage
    My solution for the Question 54 is below as my understanding on the concept of learning curve

    Unit DLH/ hour
    Unit 1      10,000
    Unit 2         8,000 = 10,000 × 80%
    Unit 4         6,400 = 8,000 × 80%
    Unit 8         5,120 = 6,400 × 80%
    Direct labor hour to produce 8 units = 10,000 + (8,000 × 2) + (6,400 × 4) + 5,120 =      56,720

    The correct answer: Unit DLH/ unit
    1      10,000
    2         8,000 = 10,000 × 80%
    4         6,400 = 8,000 × 80%
    8         5,120 = 6,400 × 80%
    Cummulative average direct labor = 5,120 hrs/ unit
    Cummulative average direct labor to complate 8 units = 5,120 × 8 units =      40,960 hours





  • 2.  RE: 1B Learning curve

    Posted 14 days ago

    Do not accumulate all results for all units. You are only required in the question to find how many hours it take to produce 8 units. 

    the answer will be 8*5120=40960 hours
    as simple as this
    hope it answered your question 



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    Deyaa Moabber
    Chief Executive Officer
    Jeddah
    Saudi Arabia
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  • 3.  RE: 1B Learning curve

    Posted 13 days ago
    Hi,

    As the name suggests, Learning Curve depicts the efficiency in the labor productivity achieved with each iteration or cycle, so to speak.

    If you were to plot the improved efficiency after each cycle on one of the axes on a graph and the total output on the other, the answer would be total hours.

    Hence, in this case, the total hours result from an 80% learning curve, meaning each iteration would improve the efficiency of the labor and reduce the number of hours spent by them.

    This is one of the most frequently tested areas of the exam, and the questions can be based on various combinations.  This one is the most straightforward.

    In this particular case, the requirement is to ascertain the total hours. Hence the output shall be the result of the number of cycles multiplied by the units.

    So 10000 * 80% * 80% * 80% = 5120 hr per unit.
    Units 1 - 2- 4- 8
    So it should be 5120*8 = 40960

    Had the question asked a step calculation, like what is the number of hours taken to produce the units in the 4th cycle, i.e., from unit 5 to 8 in the 4th iteration, then you would have used something like the following -
    No of hours till iteration 3 ( 1-2-4) = 10000*80%*80% = 6400 multiplied by the number of units produced up to iteration 3. that is 6400*4= 25600.

    Hence the number of hours for the 4 iterations that produced units 5,6,7, and 8 is =40960-25600= 15360 hours.

    I hope you got more clarity on the Learning Curve topic with this additional example. This is one of the many other types of questions that can be asked in the exam with an almost similar information set.

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    Harjjeet Gahla (ACS LLB DBF ADM)
    FInancial Controller / Accountant
    Calgary Alberta
    Canada
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  • 4.  RE: 1B Learning curve

    Posted 13 days ago
    Thank you, mates, for your help. Could you please explain by words the root of this concept?

    As far as I understand:
    Unit 1 would be completed by 10,000 labor hours by default. This would have already incurred at the time they started to make Unit 2
    Unit 2 then could be completed by 8,000 labor hours. Because the employees' skills have been enhanced by learning from working on unit 1
    Then, the actual labor time to complete 2 Units is 18,000 labor hours ( 10,000 + 8,000 hours )

    While the concept of this practice would calculate by multiplying 8,000 hours with 2 units = 16,000 hours.
    Does it mean that they assume the employees have already enhanced their skills (to reduce labor hours/unit from 10k to 8k hours) since they started to make Unit 1?  





  • 5.  RE: 1B Learning curve
    Best Answer

    Posted 13 days ago
    Hi,

    If we have a limited view of the concept then what you mentioned is correct but the concept of learning curve uses an ever increasing efficiency and it is cumulative. So the impact of the improvement would be felt on all the units that have been produced so far. I understand your concern, and it can confuse anyone but this is how the concept works. 

    To reiterate, the cumulative effect is considered and not stage by stage impact.

    So after stage 2, the overall hours would be 16000 and not 18000. And the hours for the additional unit are only 6000.

    units hours Total hours Total Incremental    hours               Per unit     Incremental hours
    1 10000 10000 10000 10000
    2 8000 16000 6000 6000
    4 6400 25600 9600 4800
    8 5120 40960 15360 3840
    16 4096 65536 24576 3072


    I hope it clarifies.





  • 6.  RE: 1B Learning curve

    Posted 13 days ago
    You made the calc exactly but the last calc not right
    You reach 5120then you multiply units 8equal 40960

    Another answer (10000*0.8)3=40960
    10000 hours
    0.8learning curve
    3 how many doubling -power
    . You know the concept macha allah you need more practice



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    Eslam Abdalla
    Accountant
    Monofia
    Egypt
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  • 7.  RE: 1B Learning curve

    Posted 13 days ago

    Dear Phuc 

    you need to understand the concept only, the way you have calculated is correct but , the mechanism how it works , that u have connected them to
    get the total time is wrong, I have copied ur data and added some notes to it, please go through that, I hope it will help.

    unit                       Hours
    1                            10000
    2                             8000=10000*.8  ( 8000 is the average of above not only 2 units, it means if we produce 3 units , i.e first 1 unit and then 2 units ,
                                                                then it will take 8000*3=24000 hours , i,e  10000 for 1st unit and 14000 for rest 2 units,( Not 10000+8000*2)
    4                             6400 (This is the cumulative average time required for single units , considering 10000 hrs and also 14000 hrs for prior 2 units)
                                            it consists  6400*4=25600 hrs
    8                              5120(This is also the cumulative average hrs taken by a single unit, considering all the prior hours)

    Dont think that when u start producing 8 units, from very beginning per unit   will be 5120 hrs, if so then u r right, but that is not the theory in learning curve.



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    Guruprasad Mohanty
    Accountant
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  • 8.  RE: 1B Learning curve

    Posted 13 days ago
    Hi Guruprasad,

    While your explanation might seem logical that the benefits of improvement would start coming in from the additional/progressive units but unfortunately, that is not how the concept of the Learning Curve works.

    If your explanation is used, it would not lead us to the right answer. While this question is a straightforward one, the exam questions can be much trickier. So correct understanding is very important. 






  • 9.  RE: 1B Learning curve

    Posted 13 days ago
    @all Thank you, people who are very intelligent and kind, for your help

    @Mr. HARJJEET GAHLA: Thank you so much. Your guidance is very clear and understandable. I used the normal logic to solve this question and recognized that is not how learning curve works after reading the correct solution

    I would like to quote your words for the correct understanding of learning curve: "the concept of learning curve uses an ever increasing efficiency and it is cumulative. So the impact of the improvement would be felt on all the units that have been produced so far"  ​

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    Phuc
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