Page 7 - MCS August Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

2. LEARNING CURVES

Learning curves are where a process gets quicker and quicker due to a learning effect taking place,
leading to the ability of workers to speed up over time.

Much of Montel’s work is automated, but wherever manual workers are involved there may be
the potential for a learning curve to exist. The most likely area for a learning curve to exist for
Montel is in lens production for the high quality lenses, which are worked on by skilled
technicians.

Criteria for a learning curve to exist

Where a process is automated a learning curve will not exist, as machines do not speed up.
Hence the first thing necessary for a learning curve to exist is that the work is done manually.

The work done also needs to be repetitive. The learning effect comes from doing the same (or
very similar) thing over and again, leading to the worker becoming more efficient at the process.

The work should also be relatively complex. There would not be much scope for speeding up a
very quick, simple process. A process that has multiple steps, each of which needs time and
attention, would have much more potential to become more efficient over time.

For the learning curve to be in effect, the process should not yet have reached something called
‘the steady state’. There is a limit to how much any process can be speeded up. Once this limit is
reached, there is no further speeding up and each time the process is done, it should take the
same time as the previous one. This means that learning usually occurs while a process is
relatively new.

Montel have been making cameras for decades. Many of its manual processes may well be ones
that have been around for a very long time and as such the learning effect will have long since
ceased. However, if new technology or industry developments mean that processes such as lens
production are altered, it may take time for the workers to get used to the new processes and
there could be a learning effect while this happens.

Consequences for the business

If a learning curve is present it can have significant consequences for costing and work scheduling.

For instance, if a new camera is developed, then a prototype may be made first. The costs of this
prototype can be used as a template for the potential costs of main production of the new
camera line.

However, when determining the labour cost, care must be taken. It is likely that when making the
prototype, the work will be unfamiliar to the manual workers involved. This means that they are
essentially at the start of a learning curve. The cameras that would eventually be made in
production should take less time to make than the prototype and this must be taken into account.

This means that the labour costs per unit for the main production would be lower than that for
the prototype.

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