A Simulation to Evaluate Multiyear Procurement Economics for Spares Acquisition.
Abstract
The purpose of this thesis was to evaluate the economics of applying the Multiyear Procurement (MYP) contracting approach on spare acquisitions. Evaluations have been performed documenting upfront savings with the use of MYP. Savings have been shown in the areas of material purchases and inflation avoidance. However, no research has looked into the downstream cost implications associated with MYP. Savings have been shown in the areas of material purchases and inflation avoidance. However, no research has looked into the downstream cost implications associated with MYP. The B-1B program issued MYP contracts ro many of their spare requirements in order to obtain the expected benefits. This research concentrated on selected items covered in those contracts. The risk areas were determined to be costs associated with engineering changes, transportation, storage, program changes, and quantity adjustments. A simulation evaluate the benefit/cost relationships of MYP. Findings were that the two cost drivers in the MYP decision are the expected upfront savings compared to the expected engineering change costs. In addition, it is not the correct approach for all items. The decision must be evaluated on each weapon system program individually. The simulation model provides this capability.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1985
- Accession Number
- ADA161739
Entities
People
- Albert F. Bodnar Jr
Organizations
- Air Force Institute of Technology