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Article: Make the learning curve work for you
- Article from:
- Chemical Engineering Progress
- Article date:
- February 1, 2000
- Author:
CopyrightCopyright American Institute of Chemical Engineers Feb 2000. Provided by ProQuest LLC. (Hide copyright information)
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Cut costs faster by using the learning curve to focus on cost-reduction opportunities.
Practice makes perfect. The more you produce or do something, the more you learn about the process, enabling you to reduce the costs of that activity. This effect has been observed everywhere from manufacturing computer chips to raising broiler chickens to performing cardiovascular surgery.
The idea that production experience leads to lower costs has been formalized in a relationship known as "the learning curve." As a general rule, each time cumulative production doubles, unit costs tend to decline about 20%. This is a good relationship to exploit to make your company more profitable.
But, there is an ...