Cost Sensitivity Analysis of a Ground Sensor System

K. K. Weaver

Expert InsightsPublished 1970

Describes and illustrates cost sensitivity analysis, the systematic investigation of total system costs in terms of individual cost components. Sensitivity analysis reduces uncertainty about the future mode of total system operation as well as individual unit costs by investigating the system's cost relationships. Such analysis thus enables the most productive allocation of R&D funds by identifying the most important parameters and quantifying the financial impact of uncertain future events. For example, one cost analysis developed annual operating costs for a ground sensor system for locating enemy targets. The total system costs were calculated by adding the costs for the 4 system parts — sensors, sower aircraft, ground stations, and relay aircraft. The sensor costs were found to be dominant because they remained constant when the total system cost decreased — thus sensor costs occupied a higher percentage of total costs.

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Weaver, K. K., Cost Sensitivity Analysis of a Ground Sensor System. Santa Monica, CA: RAND Corporation, 1970. https://www.rand.org/pubs/papers/P4361.html.
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