Learning Curve
Categories: Metrics, Financial Theory
It’s literally a graph that is, um, curve shaped. And it reflects progress made in learning.
For example, it’s about the learning of a little company in 1868 with a new-fangled waffle press style of making 8 horseshoes at a time in a mold, rather than stamping them out manually with a hammer, one by one.
The old way had a marginal cost of 60 cents a shoe to make; the new way was more like a dime or so. But the learning curves were vastly different. In the first case, the old school way of making shoes, the process had few moving parts. There was an anvil. A hammer. And a bunch of hot coals keeping the metal all soft and bendy.
Pounding happened. And the shoe was made.
So the learning curve was steep. It took a worker maybe a week to be able to work at, say, 90% of the efficiency they’d be at in 5 years, when they’d be at 98% efficiency, stamping out 10 shoes a day, or something like that.
Roll the clock forward to The Waffle Shoer. The learning curve is massive. Not only does there need to be a whole system for bringing in 40 times the wood as in the one-shoe shop, but there is all kinds of mechanical circuitry needed, like the creation of the clay and iron mold for the shoes themselves, then the non-melting, pouring mechanism, then literally gallons of molten steel, and finally, powder for the mold so that the steel shoes can be removed easily without chisels and, well, pain.
So in the early days of The Waffle Shoer, the company probably didn’t produce any usable shoes for a week. Then it had maybe 2 days a week it worked, and then produced a decent load of dozens and dozens. Then, after say 6 months, it was at 70% of its maximum capacity as it learned.
And all was good until the smithy put wet wood into the furnace and forgot to clean up the dry hay on the ground. Well, wet wood boils the water inside the fiber, which then explodes, sending out sparks. And, yeah. Bad things happened.
So more learning had to happen, and then, 3 years from inception, The Waffle Shoer was further along the learning curve, cranking out 800 shoes an hour. And now, rather than the old, manual shoer being the best in town...the horseshoe is on the other hoof.
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And finance Allah shmoop What is a learning curve Oh
all right It's literally a graph that is well curve
shaped like this and it reflects progress made in what's
it called Oh yeah learning For example it's about the
learning of a little company in eighteen sixty eight with
a newfangled waffle press style of making eight horse shoes
at a time in a mold rather than stamping them
out manually with a hammer one by one The old
way had a marginal cost of sixty cents A shoe
to make the new way was more like a dime
but the learning curves were vastly different in the first
case the old school live making shoes While the process
had few moving parts there was an anvil a hammer
and a bunch of hot coals keeping the metal all
you know soft and bendy Then pounding happened and the
shoe was made so the learning curve was steep It
took a worker maybe a week to be ableto work
at I'll say ninety percent of the ultimate efficiency that
they'd eventually be at five years later when they then
be at ninety eight point two three percent efficiency stamping
out like you know ten shoes a day or something
like that Well roll the clock forward to the waffle
Scheuer here this thing and the learning curve is massive
Not only does there need to be ah whole system
for bringing in forty times the wood as in the
one shoe shop but there's all kinds of mechanical circuitry
needed like the creation of the clay and iron mold
for the shoes themselves Then the non melting pouring mechanism
then literally gallons of molten steel and finally powder for
the mold so that the steel shoes can be removed
easily without chisels and well pains So in the early
days of the waffle sure the company probably didn't produced
any usable shoes for a week Then it had maybe
two days a week that little the whole apparatus worked
and then produced a decent load of Ah dozen maybe
a few dozen Then after six months while the company
was its seventy percent of its safe five year maximum
a capacity as it learn See it's gradually going up
this learning curve and percent throughput per week per day
or however you want to do it all was good
then until the Smith Thief put wet wood under the
furnace and forgot to clean up the dry hay on
the ground and wealth Wet wood boils the water inside
of the fibers of the logs there which then explode
sending out sparks and bad things happen so more learning
had to happen And then three years from inception the
waffle Shuler was here on the learning curve cranking out
eight hundred shoes and hour and now rather than the
old manual sure being the best in town while the 00:02:35.663 --> [endTime] horseshoe is on the other hoof