Risk assessment of readiness and life cycle cost for weapon systems

Abstract

Given an acceptable level of military performance, arguably the two most important criteria for weapon systems performance are readiness (operational availability, or Ao) and life cycle cost (LCC). These two criteria are in conflict: one may maximize Ao by increasing LCC or minimize LCC by degrading Ao. In this paper, we develop a model to analyze risk factors associated with this bi-criterion problem. To analyze the impact of input factors on risk, or variance in the outcome criteria, we conduct Monte Carlo simulation. We then apply design of experiments methodologies to identify risk factors by analyzing quantiles of these criteria in which we examine the probability that cost will exceed a certain threshold dollar amount and the probability that readiness falls below a certain threshold.