Examining the AFSC (Air Force Systems Command) Production Rate Model,
Abstract
A problem facing the cost estimator and the program manager is the need to assess program cost impacts resulting from changes in production rate. The Air Force Systems Command (AFSC) has developed the Production Rate Model for providing quick same day responses. The model is based on the assumption that the influence an increasing production rate has on decreasing the unit cost is limited. This idea follows the minimum cost point found on the long run average cost curve in economic theory. In the model's case the point is determined by the manufacturer prior to production. This point is based on plant capacity, capital investment and manpower requirements, anticipated quantities and production rate, and requirements specified by the government. The AFSC model modifies the learning curve equation by including a variable representing production rate. This equation is used to estimate recurring cost. There is an internal data base of historical programs containing first unit cost, learning curve slope, and production rate slope generated with a nonlinear regression technique. The nonlinear regression technique was used to reduce the effects of multicollinearity and bias associated with ordinary least squares regression. AFSC knows about and accepts the statistical limitation because the model was developed to provide a good approximation of the change in cost that result from a production rate change.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 20, 1985
- Accession Number
- ADA165033
Entities
People
- Thurman D. Gardner