Extending the Aircraft Availability Model to a Constrained Depot Environment Using Activity-Based Costing and the Theory of Constraints
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING AND MANAGEMENT
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The Aircraft Availability Model AAM assists managers in the selection of an optimal list of items to repair in order to attain the best aircraft availability rate. The model considers procurement or repair costs for the components as if the costs were unit variable as a price, instead of a repair cost representing a mix of both fixed and variable cost. This research used the AAM in conjunction with Activity Based-Costing ABC and The Theory of Constraints TOC methodologies to investigate the relationships between price, product mix, Aircraft Availability AA and total cost. This approach explicitly recognizes that the Air Force Material Command uses its own resources in repairing components, and that it is always operating in a constrained environment in which resources practical capacities are exceeded by requirements that limit the attainable AA. The results of this investigation shows that the choice of the optimal mix of reparable items is sensitive to the pricing method used as well as environmental factors like repair cycle time, fleet size, and the intensity and balanced of shop resource load. In addition, the research found that the performance of the repair center should be evaluated under the metric Aircraft Availability per System Total Cost, following the rationale under the TOC methodology that considers labor costs as operational expenses, fixed in the period, and only raw materials as variable costs.
- Economics and Cost Analysis