Estimating Life-Cycle Costs

A Case Study of the A-7D

by Marco R. Fiorello


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This report is concerned with the determination of costs incurred in acquiring and owning a weapon system and the data problems associated therewith. Incurred or historical costs can be used to anticipate future costs of operations and support, to compare forecast with incurred costs for evaluating forecasting techniques, or to estimate a weapon system's total life cycle costs (LCC) for use, along with the associated weapon system capability, in force structure planning. The principal objective of the study is to demonstrate the derivation of the life-cycle cost, and in particular the FY 1973 costs of ownership are a major component of the life-cycle cost of a weapon system; this single-year estimate provides a basis for projecting a total cost of ownership and for understanding these costs within a LCC perspective as well.

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