The cumulative average-time learning model assumes that the cumulative average time per unit decreases by a set percentage each time the cumulative quantity of units produced doubles. Thus, if a learning curve of 80% is assumed, then the average time per unit would decrease by 20% (100% - 80%) each time the company doubles production (e.g., going from one unit to two units produced).

In the example presented in the video, the cumulative average time per unit is calculated using the following equation:
y = (a) * (X^b)
where
y = cumulative average time per unit
X = cumulative number of units produced
a = time required to produce the first unit
b = [ ln (learning curve % in decimal form) ] / ln 2

For an 80% learning curve, "b" is calculated as follows:
b = ln 0.8/ ln 2 = -0.2231 / 0.6931 = -0.3219—
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