Kinked Experience Curve
Encyclopedia of Business Analytic and optimigation, (2014), 1358.
12 Pages Posted: 5 Aug 2013 Last revised: 26 Mar 2015
Date Written: August 5, 2013
How much productivity improvement or cost reduction would be possible when the number of semiconductor chips fabricated increased from one million to two million? How many more wind farms or photovoltaic farms needed to be installed before their unit cost of producing electricity can become parity with unit cost from the fossil power plant? Can the child mortality rate in the world be reduced by two-thirds between 1990 and 2015? Or, can the prevalence rate from tuberculosis be reduced by 50% between 1990 and 2015? Can experience curve (EC) models provide answers to these questions? We present an extended EC approach known as kinked EC models which are capable of predicting the long-term future performance measures such as accident rate, mortality rate, energy efficiency index, etc. in the context of large learning systems such as nation, region, or even the world.
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