Strategic Implications of Learning Curves
So far, we have shown how operations managers can forecast labor-hour requirements for a product. We have also shown how purchasing agents can determine a supplier’s cost, knowledge that can help in price negotiations. Another important application of learning curves concerns strategic planning.
An example of a company cost line and industry price line are so labeled in Figure E.2. These learning curves are straight because both scales are log scales. When the rate of change is constant, a log-log graph yields a straight line. If an organization believes its cost line to be the “company cost” line, and the industry price is indicated by the ...
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