DISCOUNTING IN MILITARY COST-EFFECTIVENESS STUDIES

Abstract

Discounting is a means of assigning different weights to cost expected to be incurred in different future time periods. Such costs are a vital element of cost-effectiveness studies, which under present Department of Defense policy provide the primary basis for military procurement and force structure decision making. The discounting process is reviewed, and an attempt is made to identify qualitatively the factors which should determine the discount rate to be used in Department of Defense cost-effectiveness studies. These factors are separated into two groups: those which apply to cost-effectiveness studies of all types of weapons systems, and those which depend upon the type of system being considered. Finally the manner of presenting the results of the discounting process to the decisionmaker is discussed.

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Document Details

Document Type
Technical Report
Publication Date
Jan 01, 1965
Accession Number
AD0475334

Entities

People

  • Donald R. Stone

Organizations

  • Naval Postgraduate School

Tags

Communities of Interest

  • Human Systems
  • Space
  • Weapons Technologies

DTIC Thesaurus Topics

  • Cost Analysis
  • Cost Effectiveness
  • Cost Estimates
  • Costs
  • Department Of Defense
  • Federal Budgets
  • Force Structure
  • Governments
  • Income
  • Investments
  • Money
  • Naval Warfare
  • Operations Research
  • Probability
  • Procurement
  • Random Variables
  • United States

Readers

  • Life Cycle Cost Analysis
  • Theoretical Analysis.