What is the ‘Learning Curve’
A learning curve is a concept that graphically depicts the relationship between cost and output over a defined period of time, normally to represent the repetitive task of an employee or worker. The learning curve was first described by psychologist Hermann Ebbinghaus in 1885 and is used as a way to measure production efficiency and to forecast costs. In the visual representation of a learning curve, a steeper slope indicates initial learning translates into higher cost savings, and subsequent learnings result in increasingly slower, more difficult cost savings.
Explaining ‘Learning Curve’
The learning curve is also referred to as the experience curve, the cost curve, the efficiency curve or the productivity curve. This is because the learning curve provides measurement and insight into all of the above aspects of a company. The idea is any employee, regardless of position, takes time to learn how to carry out a specific task or duty. The amount of time needed to produce the associated output is high. Then, as the task is repeated, the employee learns how to complete it quickly and reduces the amount of time needed for a unit of output.
Benefits of Using the Learning Curve
The learning curve does a good job of depicting the cost per unit of output over time. Companies know how much an employee earns per hour and can derive the cost of producing a single unit of output based on the amount of hours needed. A well-placed employee who is set up for success should decrease the company’s costs per unit of output over time. Businesses can use the learning curve to conduct production planning, cost forecasting and logistic schedules.
Further Reading
- The learning curve and optimal production under uncertainty – www.nber.org [PDF]
- A learning curve of the market: Chasing alpha of socially responsible firms – www.sciencedirect.com [PDF]
- Using linear model for learning curve effect on highrise floor construction – www.tandfonline.com [PDF]
- The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: where are we on the learning curve? – www.sciencedirect.com [PDF]
- Defining the learning curve for paramedic student endotracheal intubation – www.tandfonline.com [PDF]
- A Model of Long-term Quality Cost Based on Learning Curve Effect [J] – en.cnki.com.cn [PDF]
- Using the learning curve to maximize IT productivity: A decision analysis model for timing software upgrades – www.sciencedirect.com [PDF]
- Revisiting the applicability of learning curve theory to formwork labour productivity – www.tandfonline.com [PDF]
- Climbing up the pay-for-performance learning curve: where are the early adopters now? – www.healthaffairs.org [PDF]
