Reconciliation of learning rates between the cumulative average vs incremental learning rate models
Robert E. Jensen
Scandinavian Journal of Management, 1991, vol. 7, issue 2, pages 137-142
There are two basic learning curve time and cost models that are somewhat confusing, because the same learning rate (e.g. the 80% learning curve) yields different results. The cumulative average model applies the learning rate to average variable cost, whereas the incremental model applies it to marginal cost. This note stresses that, even though an analyst may prefer to conceptualize learning as an explicit constant in the incremental unit learning model, that same analyst has implicitly assumed a varying learning rate in the cumulative average model. A vice versa situation arises if a constant learning rate is assumed in the cumulative average model. Textbooks that compare both models do not reconcile them in the manner presented in this paper.
Keywords: Management; accounting; cost; accounting; learning; curves; cost; models (search for similar items in EconPapers)
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:eee:scaman:v:7:y:1991:i:2:p:137-142
Ordering information: This journal article can be ordered from
http://www.elsevier. ... me/872/bibliographic
Access Statistics for this article
Scandinavian Journal of Management is currently edited by Janne Tienari
More articles in Scandinavian Journal of Management from Elsevier
Series data maintained by Zhang, Lei ().