Experience Curve
What is Experience Curve?
The experience curve consequence is broader in scope than the learning curve effect include far more than just labor time. Experience curve states that the more often a task is performed; the lower will be the cost of doing it. The Experience curve relation holds over a wide range industries. The task can be the production of any good or serve. All time additive volume doubles, evaluate added costs (including administration, marketing, distribution, and manufacturing) fall by a continuous and predictable percentage.
The experience curve disagrees from the learning curve. The learning curve inform the detect reduction in the number of expect direct labor hours as workers learn their jobs. The experience curve by contrast applies not only to labor intensive position, but also to procedure determine ones.
These effects are often denote graphically. The curve is plotted with cumulative units produced on the horizontal axis and unit cost on the vertical axis. A curve that depicts a 15% cost reduction for every repeat of output is called an “85% experience curve”, indicating that unit costs drop to 85% of their original level.
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