Case Study: Readiness and Total Ownership Cost Analyses for New Fighter Aircraft, F-XX

Abstract

This case is intended to illustrate key trade-offs in planning the acquisition of a major weapon system. In particular, the impact of logistics and maintenance decisions on life-cycle costs and readiness are examined. The case provides sufficient data to allow a rich discussion of issues and trade-offs without being overwhelming. The case raises strategic policy issues but provides an analytical framework and data so that the policy issues can be discussed in detail, and not merely with generalities. Logistics and maintenance issues examined within the case include the critical protection (spare-part) levels and reliability of major components, depot and preventive maintenance turnaround times, as well as planning for exogenous factors such as variability in the price of petroleum, oil, and lubricants. By examining a set of related decisions simultaneously, the case allows students to explore the relative leverage of logistics and maintenance decisions on cost and readiness. By examining endogenous as well as exogenous factors, the case allows students to examine the impact of factors within the control of program managers as well the impact of factors beyond their control on budget and readiness risk. The intent of the case is to move beyond planning simple budget and readiness targets and to encourage students to discuss methods of robust contingency planning. Specific learning objectives include, an understanding of the life-cycle cost implications of logistics and maintenance decisions, an understanding of the readiness implications of logistics and maintenance decisions, an understanding of the trade-offs between life-cycle cost and readiness, an understanding of the implications of logistics and maintenance factors on readiness risk, and an understanding of the implications of logistics and maintenance factors on budget risk. The development of this case was supported by the Naval Postgraduate School. This case was prepared by Dr. Keebom Kang and Dr. Kenneth Doerr for use in Dr. Kang's Logistics Engineering class at the Naval Postgraduate School. A teaching note is available for instructors at educational institutions by requesting a copy from Dr. Kang.