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Saturation of Learning Curves in Defence Acquisition Projects


Affiliations
1 Development Canada Centre for Operational Research and Analysis Ottawa, Canada
 

Recent empirical evidence has shown that learning is a central cost risk factor in defence acquisition projects. The military learning-by-doing literature implicitly assumes that the marginal cost (or time) required to produce the nth unit (e.g., aircraft, ship) will asymptotically approach zero as n increases. It's assumed, in this paper, that the unit cost reaches a steady state where it remains constant over time. A new method that combines statistical analysis and stochastic simulation is suggested to estimate the distribution of the steady-state value. A case study on the acquisition of new warships is used to illustrate the approach. This model is general and can be applied to various defence acquisition projects.

Keywords

Learning Curves, Plateau Model, Cost Risk Profile, Simulation.
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  • Saturation of Learning Curves in Defence Acquisition Projects

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Authors

Abderrahmane Sokri
Development Canada Centre for Operational Research and Analysis Ottawa, Canada

Abstract


Recent empirical evidence has shown that learning is a central cost risk factor in defence acquisition projects. The military learning-by-doing literature implicitly assumes that the marginal cost (or time) required to produce the nth unit (e.g., aircraft, ship) will asymptotically approach zero as n increases. It's assumed, in this paper, that the unit cost reaches a steady state where it remains constant over time. A new method that combines statistical analysis and stochastic simulation is suggested to estimate the distribution of the steady-state value. A case study on the acquisition of new warships is used to illustrate the approach. This model is general and can be applied to various defence acquisition projects.

Keywords


Learning Curves, Plateau Model, Cost Risk Profile, Simulation.

References