Published by:
Harvard Business Publishing
Length: 10 pages
Share a link:
https://casecent.re/p/48535
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
It is important for managers to realize that they cannot receive the benefits or cost reduction provided by a steep learning-curve projection and at the same time accomplish rapid rates of product innovation and improvement in product performance. Managers need to exercise care in choosing between the learning curve approach, which shows that manufacturing costs fall as volume rises, and the experience curve approach, which traces declines in the total costs of a product line over extended periods of time as a volume grows. When selecting a strategy, management investigates: the practical limit to volume/cost reduction, the pattern of changes in the organization which accompany progress along the learning curve, and the expected results when the practiced limits of cost reduction are reached.
About
Abstract
It is important for managers to realize that they cannot receive the benefits or cost reduction provided by a steep learning-curve projection and at the same time accomplish rapid rates of product innovation and improvement in product performance. Managers need to exercise care in choosing between the learning curve approach, which shows that manufacturing costs fall as volume rises, and the experience curve approach, which traces declines in the total costs of a product line over extended periods of time as a volume grows. When selecting a strategy, management investigates: the practical limit to volume/cost reduction, the pattern of changes in the organization which accompany progress along the learning curve, and the expected results when the practiced limits of cost reduction are reached.