Risk-Based Modeling of Life-Cycle and Total Ownership Cost

Abstract

In this research, we answer the following primary question: Would an advanced analytical model be a more effective metric to estimate total ownership cost (TOC) with life-cycle cost under uncertainty and risk than the current method of life-cycle cost estimates for surface electro-optical infrared (EO/IR) sensors? To accomplish this, we developed and analyzed a computational model for Total Ownership with Life-Cycle Cost Model Under Uncertainty for Surface Electro-Optical Infrared Sensors. During the development of the model, we identified the required data and examined the current Department of Defense (DoD) method for determining system life-cycle costs for defense systems and determined that the proposed model is a useful alternative to the current method of determining the life-cycle costs for EO/IR sensors on surface ships. Finally, we concluded that the developed model can be applied to cost estimating in other sectors of DoD cost projections.