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Economic Production Rate Study

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The objective of this study is to give the Program Manager tools for use in discussing, planning and evaluating economic production rates. In order to deal with large scale, multi-tiered acquisition programs, a distinction must be made between procurement and production rate. The economic procurement rate refers to the rate of acquisition of the complete system, while the economic production rate addresses each component or contractor contributing to the system. The EPR is defined as that rate of procurement or production that permits efficient use of available industrial resources to achieve the lowest unit cost. Using a model suggested by John Bemis, this study examines the procurement profile of five major Dod acquisition programs--the Armys M-1 tank, Fighting Vehicle System and TOW missile, the Air Forces A-10 aircraft, and the navys A-6E aircraft. The model can be expressed either graphically or as an exponential equation. The graphical form is especially useful when iso-unit cost lines are plotted on axes of production rate versus cumulative quantity. In this form it is possible to evaluate various procurement profiles of a system and draw some conclusions concerning their relative efficiencies. This analysis was done for each of the five systems, and savings from more economical rates are estimated.

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This article is from 'Proceedings of the Federal Acquisition Research Symposium with Theme: Government, Industry, Academe: Synergism for Acquisition Improvement, held at Williamsburg, Virginia on 7-9 December 1983, ADA137700, p256-261.



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Approved for public release; distribution is unlimited.

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