Posted by In Search of the Production Steady State: Mission Impossible?
From the Journal of Cost Analysis and Parametrics: Volume 10 | Issue 1 | October 2021
Downloadable File: JCAPv10i1-ProductionSteadyState-McCarthy
Abstract: Learning Curves are a vital tool for cost estimators when predicting the number of direct labor hours required for a production run. One challenge of utilizing learning curves is predicting when no additional improvement can be expected, otherwise known as the steady state of the production run. This paper will address the formal definition of a learning curve, the different types of learning that impact production systems and why the steady state plays such a critical role in cost estimates. The steady state concept, as well as its importance and impact will be explored. Interpretation of data and causes of the steady state, both genuine and artificial, will also be addressed. A sample estimate will be developed that utilizes historical data to identify an anticipated steady state and predict direct labor requirements for a new system. Lastly, the unique nature of Department of Defense (DoD) acquisition and its impact on production environments will help us determine whether the steady state truly exists or not.
Author: Pat McCarthy, a Program Manager at Technomics’ Troy, MI office, has over 19 years of experience in Federal and private industry performing cost analysis and Industrial Engineering studies. He has previously worked as a Cost/Price Analyst and Team Lead with Booz Allen Hamilton and the Army Contracting Command and as a Senior Industrial Engineer and Team Leader with General Dynamics Land Systems. Pat is CCEA and PMP certified and holds B.S. and M.S. degrees in Industrial Engineering from Purdue University.