Management Decision Utilizing Cost-Effectiveness Modeling

An example of how the specifics of a major subsystem are related to the decision rules developed from cost-effectiveness considerations is given. An extensive study of a subsystem for an advanced ship deployment system was conducted to select the cost-effective subsystem and specify the procurement parameters from many attractive subsystem alternatives. It is shown that for a subsystem whose performance does not limit the productivity of the primary system (achieves minimum productivity) the measure of effectiveness for a constant force size is lowest life cycle cost (LCC). Since only minimum productivity is needed for the lowest LCC, any expenditure which results in getting increased subsystem productivity is both unwarranted and irreconcilable with proper cost-effectiveness concepts as applied to subsystems. The lowest LCC subsystem alternative is shown to be capable of meeting minimum productivity requirements by parametrically analyzing the cost-effectiveness model. The productivity of the subsystem during the mission is a function of the following: equipment state at mission start (includes ``under repair' states), mission dependability, and subsystem performance by equipment state. The subsystem meeting minimum productivity requirements and the lowest LCC was identified and became the management choice.