Supposition of Learning Curves:

Learning curve is based on three supposition:

1. The time needed to complete a new task shall always be less than the time undertaken by previous task to complete.

2. Unit time taken by any firm to generate the products shall always show a decreasing pattern.

3. The decreasing pattern of time may be easily calculated.

The per cent reduction in time is utilized to calculate the percentage learning. Suppose any firm has drop off the production time by 25%. It means that the firm possesses the 75% learning. Now-a-days the concept of learning curve is extensively accepted. Many firms have used the concept of learning curve and enjoyed the benefits in terms of reduction in production cost, time, etc. One such practical example is given as follows:

The "HP" company has utilized the concept of learning curve to make thermal inkjet printers. They apply the strategy of producing low volume high price products. Consequently other firms begin competition with "HP" by generating the same component. Till that time the learning curve of "HP" came down and now they are capable of producing the same product in large volume at lower cost. Therefore maintains their monopoly in the thermal inkjet printers.

There may be several ways to develop a learning curve on the basis of available data such as by logarithms, arithmetic tabulation, and some other curve-fitting methods describing the progress report of any industry. The improved performance in terms of outputs may be easily visualised from Figures (1) and (2)

Figure (2) : A Progress Curve