Availability-Based Real Options Approach to Accurately Determine the Cost and Pricing of Performance-Based Logistic Contracts
MetadataShow full item record
Performance-based logistics (PBL) is growing in popularity for both governmental and non-governmental acquisitions of critical systems. These contracts allow the customer to buy the performance of the system rather than purchase the system, and/or to buy the availability of the system rather than pay for maintenance. Outcome-based contracts, which include PBL, are highly quantified ﾓsatisfaction guaranteedﾔ contracts where ﾓsatisfactionﾔ is defined by the outcomes received from the system, i.e., the specified performance level or availability. Maintenance planning seeks to predict and optimize when maintenance for a system is performed. Prognostics and Health Management (PHM) provide Remaining Useful Life (RUL) estimates that can be used to plan maintenance. The challenge is how to use the predicted RULs (with their associated uncertainties) and the performance requirements imposed by the outcome-based contracts to optimally plan future maintenance. This research uses a real options approach to optimize maintenance planning under the constraints imposed by outcome-based contract requirements. A simulation-based real options analysis (ROA) approach is used to determine the optimum predictive maintenance opportunity for a system managed via an outcome-based contract. The methodology is applied to individual systems and fleets of systems, and production and non-production systems.
NPS Report NumberUMD-LM-17-200
Showing items related by title, author, creator and subject.
A High-Value-Best-Value approach to public shipyard human capital management to improve ship availability Buckley, Shannon R. (Monterey, California: Naval Postgraduate School, 2015-09);One of the problems faced by public shipyards is delays in completing maintenance, upgrades, and overhauls on ships. The general trend is for ships to be delivered behind schedule, which impacts the U.S. Naval Fleet’s ...
Hoo, Yew Kee (Monterey, California: Naval Postgraduate School, 2015-09);The requirement for high availability of critical infrastructure necessitates the use of correct maintenance approaches for each system that supports the DOD missions. This thesis used a risk-adjusted cost method as the ...
Sodhi, Manbir; Jester, Better; Ferguson, James C.; Bussiere, Marie E. (Monterey, California. Naval Postgraduate School, 2010-04-30); NPS-AM-10-039This paper sets forth a model-based approach for selecting terms applicable to a heavyweight torpedoes (HWT) Performance Based Logistics (PBL) contract capable of addressing both near- and long-term support considerations ...