Extensions to the Learning Curve: An Analysis of Factors Influencing Unit Cost of Weapon Systems

摘要

The use of learning curves to analyze unit costs experienced during the manufacture of items produced from a repetitive process is widespread. The assumption implicit in the use of learning curves is that cumulative quantity produced is the primary factor influencing the pattern of unit costs. This paper adds to the learning curve model variables reflecting production rate, company- wide activity and fixed costs, and industry activity. Empirical tests conducted using data from missile weapon systems show that each variable enhances the explanation of unit cost but the importance of the variables depends on the nature of the cost series being analyzed. Additional tests examine the influence of broader economic and political factors on weapon system unit cost