Date of Award

1986

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Abstract

This research examines measures of economic efficiency in aircraft production. In particular, a type of nonlinear frontier estimation is contrasted with more traditional methods for estimating a dynamic cost function. This cost function is grounded in economic theory, and it is consistent with our knowledge of the aircraft production process. The model includes the effects of both learning and production rate on total program costs. Our model differs from more traditional cost specifications in that we make no attempt to measure production rate. Our model links direct labor requirements to fixed delivery schedules, under the assumption that the firm attempts to optimize production rate over time. The implication is that the optimal direct labor time path is purely a function of time. This makes our model particularly convenient for application since production rate on aircraft programs is extremely difficult to measure. The usefulness of our model is demonstrated by analyzing the central hypothesis of the thesis. It is shown through various sensitivity analyses that an alternative procurement policy could have resulted in a lower total program cost to the government for an airframe production program. It is also explained how this model fits within a comprehensive decision support system that is being designed for the Department of Defense.

Pages

147

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