2013 Volume 12 Issue 4 Pages 167-179
The learning curve depicts a decrease in production cost per unit as cumulative volume increases. However, a learning curve does not realize even if the history of production translates into an increase of cumulative volume. It is major premises for cost reduction to change technology in expectation of increasing scale of production. For example, new machinery and equipment are installed in preparation for commercial manufacturing, or product designs are modified for mass production. In other words, the first step to realize the learning curve is the management decision to mass-produce without falling victim to ceiling psychology. When building a prototype, you would use the unique building method suitable for it. If you were producing 10 units, you would naturally use a manufacturing method suited for 10 units. Similarly, for 100 units you would use a method for 100 units. For manufacturing 10,000 units, a mass production methodology for efficiently producing 10,000 units is best suited. Only forecasting of gargantuan cumulative volume from the very beginning enables the factory to adopt appropriate methods and technology for mass production. The learning curve could emerge only if the management has an unwavering conviction on a gigantic scale perspective. As a major premise for technological options, management's scale perspective is the secret of the learning curve.