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Analytical Insight, Global Leaders

The Effect of Learning Curve on Production

Operations Professor Suresh Chand, with the assistance of PhD student Sunantha Teyarachakul, is seeking to understand the effect of learning and forgetting on batch sizing decisions in a production environment. Batch size is how many units of products should be produced for inventory analysis. Learning occurs where time to perform a task goes down with repetition. Forgetting occurs where time to perform a task goes up due to time elapsed since the last completion of the task. The duo’s research draws insights from industry professionals who face batching decisions in their everyday work experiences.

It is up to a firm to determine the production schedule to meet demand. If batch sizes are large and batches are produced infrequently, there is a large amount of learning within the batch, which is positive, but also a large amount of forgetting between two successive batches, which is negative. One practitioner noted, “We produce in large batches because our setup times are large. And our setup times are large because we set up infrequently and do not really learn how to set up."

Professor Chand sought to model the learning and forgetting associated with gaps in batch production. This included looking at the time to perform a task, such as installing the door on an automobile. Task time decreases as the task is repeated and knowledge is gained. This creates a learning curve where the 200th unit produced may require 20% less time than the 100th unit.

The issue of the effect of learning and forgetting on productivity is an important one. In 1990, Argote and Epple noted: “Large increases in productivity are typically realized as organization gain experience in production. These learning curves have been found in many organizations. Organizations vary considerably in the rates at which they learn. Some organizations show remarkable productivity gains, whereas others show little or no learning. Reasons for the variation observed in organizational learning curves include forgetting, employee turnover, transfer of knowledge from other products, and other organizations and economies of scale.”

Studies have also shown that the amount of forgetting increases as the gap between two successive repetitions of a task increases. Also, people forget at a relatively lower rate early in the gap and at a quicker rate later in the gap followed by a slower rate again.

Toyota’s approach, which is covered in Prof. Chand’s operational management course, is to produce a unit and to learn to manufacture better the next production cycle. This continuous improvement philosophy is what inspired Prof. Chand to investigate the subject more in depth. Students across various disciplines can gain insight from the research.

Similar to operations, there are two types of tasks: procedural and autonomous. An example of autonomous is riding a bike, where the skill becomes inherent and is recalled quickly. Procedural would be an activity such as working in Excel. For instance, if a student only works with spreadsheets every six months, there will be some skills that will require relearning when working with them again. Individuals should seek to improve their skills with the repetition of each task, but this can only be accomplished if the skills are retained and built upon.
The result of Prof. Chand’s research suggests that firms are better off producing smaller batches. The advantages include producing more frequently, reducing forgetfulness and creating a continuous learning process. Combined with this recommendation is spending time each day on improvement activities. Rather than scheduling work for eight hours a day, spending 30 minutes thinking about improvement processes to get feedback can reduce the amount of forgetfulness. 
Prof. Chand has published five papers on modeling batch sizes and teaches operations management in the MBA program.

- Heather Owens (MBA ’12)