Accession Number : ADP002753

Title :   Cost Risk Trade-Offs in Timing the Production Decision,

Corporate Author : COCKERHAM (JOHN M) AND ASSOCIATES INC HOPEWELL VA

Personal Author(s) : Cockerham,J. M.

Report Date : 1983

Pagination or Media Count : 6

Abstract : The question before every development and acquisition program is when should production resources be committed. The actual decision to enter production is normally assumed to be the same point in time where the expenditure of production monies is authorized or initiated. This assumption is challenged through the analysis of the total cost risk of of the combined RDT&E and production programs versus time. Consideration is given to technical risk, program termination liabilities, RDT&E spending rates, production spend rates, cost of program stretchout, production leadtimes and return on investment. The purpose is to present and explore the primary financial factors and interrelationships to determine the optimum time to expand production monies independent of the final production decision. The methods and principals are demonstrated by an example derived from an actual application on a major weapon system. (Author)

Descriptors :   *Industrial production, *Decision making, *Government procurement, *Management planning and control, Resource management, Planning programming budgeting, Production, Risk, Trade off analysis, Finance, Cost analysis, Optimization, Symposia

Distribution Statement : APPROVED FOR PUBLIC RELEASE