Accession Number:

ADA582469

Title:

Cost Growth Above Inflation (CGAI) in Operating and Support (O&S) Costs in Raw Materials for Air Force Aircraft

Descriptive Note:

Master's thesis

Corporate Author:

AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH GRADUATE SCHOOL OF ENGINEERING AND MANAGEMENT

Personal Author(s):

Report Date:

2013-03-01

Pagination or Media Count:

70.0

Abstract:

Cost growth above inflation CGAI is the cost growth that exists after adjusting for the effects of currency inflation over time. The time value of money would suggest the increase in Operating and Support OS costs over time would only be affected by inflation. In essence, every year aircraft need to be maintained at the same level and OS costs should not change, assuming the same level of requirements. If CGAI exists in OS there will be a large inaccuracy in the total life cycle cost LCC of weapon systems and an inaccurate budget put in place. An inaccurate estimate of OS costs lead to budgeting problems and creates future budget issues. This study begins an exploration of CGAI and attempts to measure the relationship of the cost growth to unaccounted increases in raw material cost. Specifically, we evaluate CGAI through an analysis of raw material costs from a period of 2000 to 2012 for Air Force aircraft. Raw material costs ideally should only be affected by inflation, and thus any cost growth beyond inflation indicates a problem. A better understanding of inflation-adjusted cost growth provides understanding why OS cost continues to increase beyond the rate of inflation.

Subject Categories:

  • Aircraft
  • Administration and Management
  • Economics and Cost Analysis
  • Logistics, Military Facilities and Supplies

Distribution Statement:

APPROVED FOR PUBLIC RELEASE