With each new task you tackle, the time it takes to complete the project decreases as you gain more experience. The improvement in efficiency is a learning curve. Learning curves don’t only apply to learning a new job, though. Learning curves are a great tool to employ if you want to set labor standards, evaluate employee performance, prepare cost estimates, and set incentive wage rates. As you begin to understand learning curves, consider the two different learning curve models.
Wright’s Cumulative Average Model
Understand that T.P. Wright invented Wright’s Cumulative Average Model in 1936. It’s a great formula to use if you have simple learning curve problems.
Consider the formula Y = aXb.
Learn that Y equals the time or cost per unit. X equals the number of units produced. A equals the time or cost required to make the first unit. B equals the slope of the function when you plot it on log paper.
Crawford’s Incremental Unit Time (or Cost) Model
Understand that a team of researchers at Stanford University invented Crawford’s Incremental Unit Time (or Cost) Model. This is the most widely used formula to calculate learning curves.
Consider the formula Y = aKb.
Learn that Y equals the incremental unit time or cost of the lot midpoint unit. K equals the midpoint of a specific production lot or batch. A equals the time or cost required to make the first unit. B equals the slope of the function when you plot it on log paper.
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