Citation

Greenfield V, Persselin D. Def. Peace Econ. 2003; 14(5): 357-368.

Copyright

(Copyright © 2003, Informa - Taylor and Francis Group)

DOI

10.1080/10242690302926

PMID

unavailable

Abstract

The US Air Force is asking when to replace its aging aircraft. We develop a framework to identify economically optimal replacement strategies that recognizes cost trade-offs and incorporates age effects. We also preview a stochastic methodology. We use the framework to identify an optimal strategy, defined by the replacement age, for a generic fleet and conduct a sensitivity analysis. Quantitative illustrations show that the range of strategies that provides close-to-optimal outcomes widens as the operating and support (O&S) cost growth rate decreases and the ratio of the acquisition price to the initial O&S cost increases. A wider range implies more decision-making leeway.